The Coalition government had been a strong supporter of the local FinTech and RegTech sectors, and naturally the sectors’ two industry associations are hopeful the Scott Morrison’s third budget would continue to build on that support.
The RegTech Association and FinTech Australia, are both advocating to see regulators, startups, and large financial institutions work together in an open and levelled playing field.
FinTech Australia chairman Stuart Stoyan said the solution to make that happen is for the federal government to implement all the recommendations that were put forward in the final report as part of the review into open banking in Australia.
“We’d like to see no limitations put around products. Some of the banks have come out saying let’s do that over a series of time but we’d like to do see that happen now for both deposit and lending products,” Mr Stoyan said.
“We’d also like to see the 12-month implementation timeframe appear too. If we leave it for any longer, it’s going to create unnecessary complications. The banks will complain this is too hard and expensive, but I’d really challenge that.
“Open banking is not just about helping FinTechs. Opening banking is about driving better outcomes for all Australians, whether they’re consumers or small business in financial services. If anything, open banking will help the banks as well. They just don’t like to admit it.”
Mr Stoyan said if Australia gets open banking right, it would expose the local financial services ecosystem to potential export opportunities.
“Australia has the potential to become experts in open banking globally, and we’ll see an export of Australia’s knowledge, experience and expertise on open banking, and that will create a number of downstream exporting opportunities for Australian companies to exporting some of those products and services, not necessarily to Asia, North America and Europe,” he said.
RegTech Association chairman Julian Fenwick agreed Australia’s strong FinTech and RegTech ecosystem should be viewed as a global competitive advantage, and that government should support both for that reason.
“I’d like to think we have a strong competitive advantage and the government will get behind that. We’re already seeing NSW government supporting the association. Will the federal government step up? I think so,” he said.
Mr Fenwick said ongoing support for the export market development grants, delivered by Austrade, will be essential to this.
“Australia has a strong financial services industry with 450,000 people working in it, but it’s quite concentrated, so if you’re a RegTech going after the big banks, there’s only five, and if each take two years to go through their procurement cycle— and that’s not changing – you need to get out and export,” he said.
“We need that support from government to get out and talk the wider world. The US has 6,000 banks and you want to be there.”
When it comes to R&D tax incentives, Mr Stoyan wants to see more improvements made, including better definitions for innovation.
“Let’s clean up the system and the way R&D tax is administered. Let’s have more of a focus on making R&D incentives more accessible to startups, and determining whether the definition of software development is considered innovative,” he told InnovationAus.com.
“Speaking to a number of startups in and outside of FinTech, the feedback is that there’s a presumption the work that startups are doing is not innovative,” Mr Stoyan said.
“What that comes back to is that the definition of innovation in Australia is tied to scientific research, and that it can only happen in petri dish. This is penalising the innovators that are not working in lab.”
Meanwhile, Mr Fenwick believes there’s a strong case for the federal government to address the local skills gap by relooking at the local education sector, and perhaps look into upskilling students with law degrees.
“When we think about the needs of the future of Australia as far as data scientists and software developers, it’s just not a 457 visa problem; it’s also about what is the education system doing to provide those people?” he said.
“There are a lot of students coming out from university with law degrees but there aren’t many lawyer jobs, so there’s an opportunity for government to start skilling those people with an IT component because that’s where RegTech gets involved. It’s the cross over between technology and regulation.”