Parliament approved the establishment of the body overlooking financial and regulatory technologies in September, after NSW Senator Andrew Bragg proposed its formation.
Senator Bragg will be sitting as chair on the committee, which is set to undertake a comprehensive inquiry into fintech and regtech developments. The committee will report by the first sitting day in October 2020.
Based on informal feedback and early submissions, the government committee has identified five key themes for the fintech sector in its newly released issues paper: access to capital, skills, taxation, regulation and culture.
In particular, a range of issues was pointed to with regulatory infrastructure, including the costs of being accredited under the incoming Consumer Data Right legislation, particularly when screen scraping, a cheaper method to acquire customer data, exists.
The report noted Australia was ranked 22nd globally in the 2019 Global Innovation Index, down from 20th place in 2018 – stating the nation is weak across knowledge and technology outputs, creative outputs and business sophistication.
“We want to create more Australian jobs. That will only happen if we are competitive as a nation,” Senator Bragg said.
“Australia is always competing for capital and the ability to bring new ideas to market. We want more Australian ideas to be exported to the world.”
Following the release of the report, the committee has called for submissions from start-ups in the sector, along with academics, civil society, government and individuals.
The issues paper has a number of questions for fintechs, including what are the largest opportunities and challenges for their businesses, and how can the government help facilitate their growth and what key regulatory reforms can it implement for that purpose.
Rebecca Schot-Guppy, general manager of peak industry body FinTech Australia called the paper a “watershed moment” for her organisation.
“In our eyes, it’s the first step towards a national agenda,” Ms Schot-Guppy said.
“We strongly support the widening of the Consumer Data Right to include other financial services areas, such as superannuation. We believe widening the regime will ensure this policy has a greater impact on competition and will see consumers overall better off.
“With regards to screen scraping, we have noted that unless the cost of CDR accreditation is lowered this practice will continue. We will continue to advise regulators in this regard to maximise the impact of the rollout of open banking next year.”
Yanir Yakutiel chief executive and founder of business lender Lumi said it was “pleasing” to see the issues paper looking to comparisons of other markets such as the UK and Singapore, but Australian fintech should also emulate the success of models such as that in Israel and Silicon Valley.
Attracting the right talent and improving on diversity in the sector, given it has been observed to be heavily male-dominated, was highlighted in the report.
“The biggest changes to support this are needed to be made to our current immigration and education systems,” Mr Yakutiel said.
Dirk Steller, founder and managing partner for fintech-focused venture capitalist Seed Space said likewise, attracting offshore talent should be a key priority for the sector.
“We hear it from many different commentators across the tech community that it’s extremely difficult to get high-quality tech experts to come here. Not only is Australia geographically isolated but it can be really hard to secure visas for skilled workers,” Mr Steller said.
“The Australian government should certainly be trying to target certain areas or industries where skills shortages are a recurring issue and where they want to promote growth and an uptick in opportunities and give visa relief to those sectors or skill sets.”
Capital access skewed toward banks
Access to capital throughout the growth cycle of a fintech – from its conception as an idea to breaking even and functioning as a well-established business was also noted as a problem for the sector.
“In terms of current barriers, for financial services, the most important things to be able to obtain to run a successful financial services business is access to capital and distribution,” Mr Yakutiel said.
“The big advantages the banks have is a huge customer base and they are able to borrow easily. For a disruptor to come in and gain scale, businesses need to offer something that compensates their initial lack of advantage. The environment is competitive, but with an obvious skew towards the banks.”
Government lagging on blockchain
Grace Wong, co-founder of mobile payment network and blockchain platform Liven commented the Australian government has been behind other world leaders looking at blockchain and racing to reap its benefits as a technology.
She noted the regulation of blockchain and uncertainty around the technology caused by the government being slow and vague could be a barrier for the sector.
“We find it interesting that blockchain isn’t even mentioned once in the federal budget,” Ms Wong said.
“This is not surprising given DTA’s chief digital officer Peter Alexander told a Senate inquiry a year ago to wait for a ‘standardised blockchain’. In my opinion that misses the point, like waiting for a universal mobile operating system before ever buying a phone.
“Blockchain is regarded by many as a foundational pillar to the ‘fourth industrial revolution’ and the new government policy roadmap intends to establish Australia as a global leader in blockchain but the last budget has left industry with more questions than answers mostly about how serious they are in becoming a leader. Sitting on the sidelines waiting for other countries to make breakthroughs is not innovation.”
Submissions for the inquiry close on 31 December.
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
Sarah has a dual bachelor's degree in science and journalism from the University of Queensland.