Australia Prepares New Regulations for Fintech
With the explosion of the financial technology sector, regulators in developed nations have had some difficulty keeping up with the trend.
Fintech is a double-edged sword, so to speak. While the young sector is providing new and unique solutions to the financial services industry, it is also proving to be a regulatory challenge.
The unprecedented nature of the fintech sector creates issues that regulators have not yet tackled before.
Australia is no exception to this trend, but regulators in the nation appear to be taking steps in the right direction.
Treasurer Scott Morrison told Australian regulators on Tuesday to prepare for an overhaul of the system that regulates the financial technology sector.
In particular, Morrison said that young fintech startups needed more maneuverability in their early stages of development.
He believes that these firms should be spending more time focusing on business ventures instead of wading through obfuscated financial regulations.
Part of the newly proposed rules include what Morrison has called a “regulatory sandbox” scheme. The regulatory provision would allow younger fintech startups to bypass the complex business and finance license application process, saving the startup precious time and money.
The sandbox, which was proposed by industry association group Fintech Australia, would also allow startups to test products and services in real time and with real users on a limited basis.
Although there would be restrictions to the size and scope of these tests, other regulations may be bypassed to improve company growth and capital investment.
The federal government of Australia is expected to release next week a new set of policies for the financial technology sector.
Morrison spoke about some of these changes earlier in the week at The Australian Financial Review Business Summit. The meeting, which was attended by the likes of RBA governor Glenn Stevens and Australian Securities and Investments Commission (ASIC) commissioner John Price, sought to discuss the future of fintech regulation.
Officials at the meeting, including Morrison, noted that the government’s push for an agile and innovative economy had partially failed, and that both fintech and new fintech regulations may provide a solution to this problem.
Treasurer Morrison has spent the last several weeks attending meetings and conferences to gather information from both government officials and from industry insiders.
Some of these insiders include the new Sydney-based fintech hub Stone & Chalk. Although independent, members from both ASIC and the Australian Transaction Reports and Analysis Centre have embedded themselves at the hub to gain further insight into the inner workings of the fintech industry.
It’s clear that regulators in Australia, in particular Treasurer Morrison, recognize the ever increasing importance of financial technology and the regulations surrounding the young industry.