ScoMo fires up new FinTech agenda
Scott Morrison: Putting FinTech reforms at the centre of Treasury's innovation policy
On a day when the Prime Minister revealed the cunning political mechanics of a possible early election, his treasurer Scott Morrison was launching an election-like manifesto aimed at boosting the Australian FinTech sector.
It is no small thing to produce a glossy 36-page booklet at short-notice, complete with new branding ("Backing Australian FinTech”) and a matching web site. So we know an election can’t be far off.
The manifesto turned out to be more of a recap of recently announced innovation policy (much of it from last December’s National Innovation and Science Agenda), together with broad statements of direction where the policy detail still lags.
When the Treasurer used his speech to the Sydney FinTech startup hub Stone & Chalk to draw a direct line between FinTech policy and the need to restore the Australian Building and Construction Commission – currently before the Senate – well, no-one was left in any doubt that the government is on a war footing.
This was a comprehensive statement of direction. Some of the measures pre-date Malcolm Turnbull as Prime Minister, but most of it is recent. Certainly all of the momentum is recent. And while there is a rush like a bull at a gate from the FinTech industry, the government is not rushing the process.
There is agreement all around on the upside, but there is rightful caution from government. One man’s regulation and red-tape is another man’s consumer protection – and there is a big downside where policy is rushed and goes awry.
The man in charge of pulling the levers and twisting the control knobs of the Australian economy has had a look at FinTech and reckons it can help us can squeeze a fair bit productive value out of the financial service sector.
One of the Treasurer’s aims is to make Australia the timezone capital for innovation in the FinTech sector. That is, its policies are directed at attracting talent and capital to Australia (its focus is Sydney).
And while it has not shortage of regional competitors in this area – Singapore, Shenzhen/Hong Kong, and Shanghai to name a substantial few – the governments wants a leadership position by 2017. This is a big ask, but it is the right ambition.
The second aim is bigger. FinTech innovation is simply a tool to enable a more productive financial services sector to drive economy-wide growth. Even if it only provides cheaper and more efficient access to capital for small businesses, this will fuel the economic engine room.
Most interesting among the many markers laid out by Mr Morrison was a focus on data, both in relation to broadening access to Comprehensive Credit Reporting and streamlining access to public data.
The Productivity Commission has been given the specific task of looking at how CCR might be used, as well as responsibility for examining the benefits and costs of extending the availability of data across the economy. In response to FinTech sector requests, the PC is also looking at standardised practices on financial data aggregation and government support for open data APIs.
More controversially, Mr Morrison has thrown the weight of the Treasurer’s office behind the creation of regulatory sandbox provisions. There is no timetable here, but Mr Morrison was talking in sooner rather than later terms – with the usual caveats and provisions around consumer protections.
This is not straight-forward, and can’t be rushed. But it is a fundamental need of the industry (and the needs of government if it wants to hit its own ambitions for 2017.) Treasury has been working with the Australian Securities and Investment Commission (ASIC) on building a regulatory sandbox for the sector, and Mr Morrison clearly believes ASIC already has the power to assist through the use of waiver powers.
Other areas of FinTech interest covered in the document includes more detail on crowdfunding arrangements, a commitment to technology neutrality in financial regulation, the GST treatment of digital currency (it won’t be taxed), and its openness to the use of Blockchain through the financial system.
It is interesting too that Mr Morrison talked about government procurement and service delivery as an opportunity for FinTech innovation. Government is using the world’s clumsiest name for this opportunity (seriously, ProcTech anyone?) but the upside is huge, even if it sounds very very dumb.
Government spent $60 billion in 2014/15 on 69,000 Commonwealth contracts. Smarter, easier and more transparent procurement practices can shave a big chunk of change off that bill, and FinTech is a part of that. And that’s not including the massive payments systems of Centrelink and the other social services agencies.
And of course, there were a few words about cybersecurity (a blood-relative to the FinTech sector.) Expect to hear much, much more about cybersecurity in the next month or so as government releases details of its $30 million Cyber Security Growth Centre closer to the election.
In the meantime, it has never been a more exciting time to be an economy in transition.
“We are moving from the investment phase of the mining boom to a far more diversified economy,” Mr Morrison said. “And that is the key to jobs and growth. That is what the next election is going to be about.”
“It will be about who is able to best able to manage and continue to steer this positive transition in our economy,” he said.
“We want to see the FinTech sector succeed because we recognise the importance of [FinTech] to overall economic growth and productivity growth.”