Treasurer Scott Morrison has unveiled plans for a new fintech “bridge” agreement between Australia and the UK in an effort to up investment in Aussie fintech startups and make “digital business a global business”.
Speaking at FinTech Australia’s Intersekt Collab/Collide summit today, Morrison announced the agreement will be signed by the end of the year. The commitment is similar to the one signed by Austrade and the Commonwealth Bank of Australia earlier this year, which also has a goal of attracting further investment and enabling an easier flow of information.
“The fintech bridge will enable close collaboration between governments, regulators and the industry — to identify emerging trends, share policy developments and better position firms for the challenges of entering a foreign market,” Morrison told the summit.
“The bridge will give our fintech firms an avenue to pursue international expansion or partnerships with innovative companies in the UK.”
Morrison said the agreement will also give Australia a “seat at the table” when it comes to discussions around global regulation and standardisation of fintech, saying Australia is a “little more progressive” when it comes to the treatment of fintech companies.
The agreement will involve significant cooperation and opportunity for development for companies across the blockchain, data, regtech, and wealthtech spaces, said Morrison.
“We want governments, policymakers and regulators to have greater access to one another and work together going forward to streamline rules and processes for fintechs looking to grow to reciprocal jurisdictions,” Morrison said.
“A collaborative approach to innovation speeds up the ability of our Australian fintechs to reach for global coverage and enhances the product that can be offered.”
Speaking to StartupSmart, FinTech Australia chief executive Danielle Szetho was highly optimistic about the potential stemming from the agreement, saying the opportunity for collaboration was “at the centre” of it.
FinTech Australia has been working closely with the government on the agreement, wanting to ensure the bridge will help areas of the fintech community where there is the most interest for learning and development.
“The UK fintech environment is far more established and has been going a lot longer than the Australian one. That’s why we looked to the UK, and this initiative will help us see what they’ve put in place that’s working, and what pitfalls and traps we can avoid when executing similar initiative ourselves,” Szetho said.
“There’s also some opportunities for Australia to show regulatory leadership, especially around the superannuation space regarding mandatory contributions.”
Morrison said details of the agreement are currently being finalised and he expects to sign a formal commitment with UK Chancellor Phillip Hammond by the end of the year.
RBA and government a “keen observer” of DAD
In his speech, the Treasurer also touched on the government’s steps to promote the adoption of digital currency and blockchain technology, saying while Bitcoin and other digital currencies are “too volatile” to replace existing tech currently, not viewing them as a potential for the future would be “unwise”.
“[Digital currencies] are coming, in some shape or form, promising to bypass the system and allow peer-to-peer transactions without the need of a mediator,” Morrison said.
Last month, a group of Australian fintech companies banded together to push the Reserve Bank to consider adopting a Digital Australian Dollar (DAD) — a stable digital coin tied to the Australian dollar.
Today Morrison said the government and the RBA were “well down the track” of assessing the potential for digital currencies, with the government a “keen observer” of the industry push.
Szetho believes the government and the RBA’s approach to the potential for the DAD has been positive so far, saying an observatory role is the right role for regulators to take in these scenarios.
“This helps regulators better understand the tech. It’s positive that APRA [Australian Prudential Regulation Authority] and ASIC [Australian Securities and Investments Commission] have been working closely with the community to better understand innovations in the space, rather than just issuing blanket bans or saying no,” she says.
“When you compare us to markets like South Korea or China where they’ve outright banned ICOs [initial coin offerings], you can really see that our regulators are trying to understand the technology to apply regulatory settings which suit it.
The Treasurer also took the time to commit to his budget promise of making comprehensive credit reporting mandatory if lenders do not reach a 40% data reporting threshold in the current voluntary reporting system by the end of this year.
“It is clear that this target will not be met as only a negligible volume of data is currently being reported in the existing voluntary comprehensive credit reporting scheme. Less than one percent of CCR data is currently being shared in public mode,” he said.
“We intend to start with the four major banks, given they account for approximately 80 percent of the volume of lending to households. Other credit providers would likely follow suit quickly to improve their competitive position in the market.”