Open banking

The Senate select committee on Australia as a technology and financial centre filed its second report for its review of the fintech industry on Wednesday, following its interim paper in September.

The group, formerly the Senate select committee on financial technology and regulatory technology, has made 23 recommendations across areas such as the R&D tax incentive, regulation and the Consumer Data Right, blockchain and enhanced global visa programs.

The aim is to strengthen the regulatory environment and increase opportunities for innovative companies to drive Australia’s prosperity.

The committee has ruled the Australian government should strive to increase international participation in the Consumer Data Right (CDR), by driving international open banking and data sharing standards, as well as adopting mutual recognition for overseas equivalents in countries such as the UK.

Further, concerns have been raised around the potential data and privacy issues if “Big Tech” became involved in open banking.

“The committee is mindful of the potential for Big Tech companies to become involved in the CDR as data recipients,” the committee report stated.

“While the existing CDR Privacy Safeguards and protocols provide some assurance, the committee heard that the participation of these companies in the CDR may still raise a range of significant privacy risks, given the volume of data already held by these entities and their sheer scale and market dominance.

“The government needs to pre-empt any issues in this area by reviewing and publicly reporting on what additional rules or safeguards may be required in the event Big Tech firms seek accreditation under the CDR.”

Fears were also pointed to around giants such as Apple and Google stifling competition for developers in their app marketplaces, in the Apple App Store and the Google Play Store.

It has also suggested the government develop “nudge” mechanisms for the CDR regime, to remind consumers periodically of their ability to find better products and services.

Other suggested changes include changing the existing law to support software development as eligible R&D, increasing transparency around capital raisings and reviewing visa programs to ensure Australia attracts international talent in the fintech and regtech sectors.

Rebecca Schot-Guppy, chief executive of FinTech Australia commented many of the recommendations in the report had been suggestions from the industry body and its members.

“The research and development tax incentive remains a key point of policy for the fintech industry, as well as the broader startup ecosystem. We strongly support and welcome the recommendation to introduce a quarterly payment and a software-specific tax incentive scheme,” Ms Schot-Guppy said.

“We also are pleased the government will consider an affiliate or intermediary model with the Consumer Data Right. If rolled out it will allow for faster adoption of the platform across fintech and other industries.”

The body has also backed calls to review working visa options, in favour of attracting talent. Ms Schot-Guppy added that any boost to the fintech industry will also bolster the Australian economy.

“Any benefit for the sector ultimately creates more competition in the financial services sector and over time will pay dividends for all Australians and our economy,” she said.

“These recommendations and a willingness to engage with industry show an understanding of this from the federal government.

The Senate committee is set to take further evidence in the coming months on developing Australia as a technology and financial centre, including a focus on the regulatory framework for blockchain technology, cryptocurrencies and digital assets, as well as the policy environment for neobanks.

It will deliver a final report with additional recommendations in October.