Prime Minister Scott Morrison’s new cabinet features a brand new ministry role, with Senator Jane Hume taking on the title of Assistant Minister for Superannuation, Financial Services and Financial Technology.
Karen Andrews has retained her title of Minister for Industry, Science and Technology, and while the word ‘innovation’ still doesn’t appear in the ministerial lineup, the specific inclusion of fintech is being hailed as a nod to the startup sector — or, at least, to a large section of it.
Speaking to StartupSmart, Alan Tsen, chair of FinTech Australia, says the appointment is an “acknowledgement of [fintech’s] importance to the economy”.
More than that, it’s an acknowledgement, in light of the royal commission, of “the opportunity that fintech presents to help rectify some of the issues, but also to really improve consumer outcomes”.
The new minister herself is a former vice president of Deutsche Bank and has served as senior strategic policy advisor at Australian Super. She’s also currently chair of the Economics Legislation Committee.
Simon Cant, co-founder and managing director of VC firm Reinventure, also calls the appointment a “positive sign of the government doubling down on fintech”.
Speaking to StartupSmart, he says “it’s particularly great to see an assistant minister with financial services experience stepping into that role, and with fintech in the title giving it real focus”.
According to Charlotte Petris, co-founder of fintech startup Timelio, having a dedicated minister to focus on fintech is “so crucial for the development of the industry”.
“There is a direct correlation between regulation and innovation, and the best way to improve competition in financial services is to make it easier for new entrants to get up and running,” she says.
“This is always the biggest challenge in a highly-regulated industry like finance.”
The appointment also shows some recognition of the importance of fintech to the economy.
Research from Blackbird Ventures general partner Nick Crocker, published last week, shows 52 companies founded by Australians since 2011 are now worth more than $100 million.
Almost a third of companies on the total list are fintechs, and the research suggests since 2011, more than $12 billion of enterprise value has been created by Australian fintechs.
“It’s exciting to see how far fintech has come over the past five years,” Petris says.
However, according to Cant, continued focus on fintech is more than just a nice-to-have, it’s a pressing requirement.
“It really is a critical sector to the economy in terms of new growth, new jobs, but it’s also a critical sector for us to continue to focus on because we have a massive financial services industry,” he says.
According to the Treasury, the financial services sector contributed $140 billion to GDP last year, and employs some 450,000 people.
But global tech giants like Facebook and Apple that “continue to look at fintech as an attractive proposition”, Cant explains.
Apple, for example, has already launched its own credit card offering, he says.
“We have a lot to lose, as well as much to gain.
“There’s a real threat that we still need to be mindful of, and so I think we need to continue to double down on supporting fintechs in this country.”
“More needs to be done”
In the cabinet shake-up, Karen Andrews has retained her position as Minister for Industry Science and Technology.
And while there is still no minister directly responsible for innovation, Andrews told StartupSmart last week innovation is not off of the agenda. Rather, it will be implemented more broadly across all sectors.
Tsen stresses innovation is “definitely” important to the Australian economy.
“The future of the economy is definitely the jobs of tomorrow, not necessarily only the jobs of today,” he says.
However, government action over the past 12 months has been widely perceived by the startup community as being anti-innovation.
Malcolm Turnbull’s National Innovation and Science Agenda, which led to new equity crowdfunding legislation and proposed reform of employee share scheme rules, has been largely undermined by additional new laws.
The AA Bill has been criticised for posing security threats to startups, and as having the potential to drive promising businesses overseas, and new social media rules restrict all tech businesses hosting content.
Elsewhere, the Startup Genome Ecosystem Report 2019 showed Sydney slipping in the global ranks of startup-friendly cities, something Cant identifies as a problem.
“More can definitely be done by the government to improve our posture as an innovation economy generally,” he says.
“Even though there has been a focus on innovation, the bar is rising in terms of how you need to compete to become an effective and successful innovation ecosystem,” he explains.
“The government absolutely has a key role in that, and I think some of the backward steps are not great,” Cant adds.
“More work needs to be done.”
A voice for all startups
And it’s the new minister being called upon to do some of this work.
Tsen and Petris are looking to Hume to bring the focus back to new regulatory frameworks that may have fallen by the wayside.
Tsen would like to see open banking back on the agenda, with the government getting back on track with a timeline that “has probably fallen behind a bit”, he says.
“I’d love to see that come back on the agenda and really be implemented,” he adds.
Petris says this re-focus will give Australian fintech an additional boost.
“I expect that a greater focus on the new regulatory frameworks, many of which have been delayed, will greatly benefit Australian fintechs and create new opportunities which capitalise on the industry’s strengths,” she says.
From Cant’s point of view, however, Hume’s role now is about “re-engaging with the community”.
“It would be good if we could review some of the cryptography laws,” Cant suggests.
“They’re not necessarily a great step forward either for fintech or the innovation sector generally.”
Cant would like to see a focus on these issues, and for Hume to stand up as “a voice for the startup sector more generally”, he says.
“Financial technology is a really core, substantial part of the overall startup community,” he adds.
“She should, therefore, consider herself a major stakeholder in how well the startup community at large is being serviced.”