The start-up community has backed Treasurer Scott Morrison’s fintech reforms, announced today at Stone and Chalk in Sydney.
The raft of changes, including the establishment of a new fintech advisory group, could see Australia become the fintech Hub of Asia within years according to several start-up leaders who backed the reforms.
The government package will help encourage some of Australia’s best and brightest bankers to leave the comfort of the ‘big four’ banks and venture out on their own with disruptive new ideas, according to Tyro Payments CEO Jost Stollman.
Mr Stollmann said today marked a turning point, as political and regulatory barriers had been holding back Australia’s thriving fintech market for too long.
“Australia’s financial services sector is the largest contributor to the national economy, contributing about $140 billion to GDP last year, and employing 450,000 people,” Mr Stollmann said.
“The Australian Government’s package of measures announced today will help unleash a new generation of entrepreneurs and investors who want to make everything we do quicker, easier and more productive.
“They will help create a new digital backbone to the economy that needs to diversify to counter the downturn in the resources sector.
According to Mr Stollman, fintech investment around the world reached an estimated US$20 billion in 20151, a jump of about sevenfold in only three years.
“Australia needs to make itself fintech friendly if it wants to set itself up for the next generation of economic growth. If it does, Australia could become the fintech Hub of Asia, servicing a market of more than three billion people, including a rampant Chinese economy.”
The government today said it would commit to:
- Creating a workable Regulatory Sandbox for start-up ventures to experiment with improved mechanisms for the delivery of financial services to consumers without having to spend their scarce start-up capital on licencing before even testing their model
- Addressing the ineligibility of many FinTech ventures to receive investment from VC funds registered under the Venture Capital Act
- Continuing to refine the Crowd Funding regulation to bring it up to par with other leading FinTech markets
- Referring progress on Comprehensive Credit Reporting, and the opportunity to create more open access to financial data generally, to the Productivity Commission
- Issuing of fresh guidelines in relation to wealth advice tailored specifically to Robo-Advisors
- Addressing the double GST currently applicable to bitcoin and other digital currencies and reviewing the application of AML and CTF laws to digital currencies to address the inability of digital currency operators secure banking relationships
- The development of funds management passports with China
Mr Stollmann sits on the Federal Government’s fintech Advisory Group that advises the Treasurer on how to improve Australia’s international competitiveness in the digital economy.
Simon Cant, President of FinTech Australia and another member of the board, said “There are some great quick wins and strong commitments to further action here. FinTech Australia is looking forward to continuing to work with the government to make this happen.”
“It’s also great to see broader representation of the FinTech community on the FinTech Advisory Group including Charlotte Petris, CEO of Timelio and Vice President of FinTech Australia and Stuart Stoyan, CEO and Founder of MoneyPlace, and a FinTech Australia board member.
“The Australian FinTech community has demonstrated a remarkable capacity to self organise and collaborate across state and other boundaries over the last two years with the establishment of two fintech Hubs and most recently, the establishment of FinTech Australia.
“I think we are seeing the results of that collective action in the focus that the government is rightly bringing to this important sector.”
Sydney-based fintech hub Stone and Chalk hosted the Treasurer today for the announcement. Alex Scandurra, Stone & Chalk CEO said he’d been impressed with the speed with which the government and particularly the Treasurer had mobilised.
“I am equally impressed by the bipartisan approach taken by the opposition to support and bring forward the conversation of how Australia can build its fintech ecosystem,” Mr Scandurra said.
“We must now work to get these policies activated swiftly and effectively. The world is not waiting for Australia, and if we intend to catch the global wave of fintech disruption we need to move quickly. Backing Australian fintech is a an important part of that process — and I look forward to working with all sides of politics to get these changes implemented.”
Ian Pollari, Global co-lead for fintech, KPMG, said the industry welcomed the measures.
“This helps ensure Australia’s fintech ecosystem continues to develop and that we are in the ‘leading convoy’ of countries enabling innovation in financial services,” Mr Pollari said.
“From our research into leading global centres achieving alignment between the public sector, that is government at federal and state levels, regulators and the private sector, including start-ups and investors, is the predominant success factor in the growth of fintech.”
Comprehensive Credit Reporting, which will now be referred to the Productivity Commission, has been controversial as the data-sharing system is voluntary and most of the banks have not signed on. SelfWealth founder Andrew Ward said the banks’ stranglehold on its data was unfair and detrimental to competition.
“It’s just a typical big bully approach by the banks as they know they will have to embrace the CCR scheme,” Mr Ward said. “Eventually they will be named and shamed and regulation must support all institutional involvement to release their data.
“Not sharing data draws a line in the sand and shows that the banks are scared. While they talk about innovating, but continue to resist sharing data, it means they obviously don’t back themselves.”
At the recent World Economic Forum it was noted that 90 per cent of the data we use today has been created in the past two years.
Published in The Australian Business Review