An Australian parliamentary committee report into competition in the financial sector has proposed 32 recommendations to ‘get the country’s house in order’.
The select committee on financial technology and regulatory technology was set up in the Senate, the country’s Parliament’s upper house, last September and – one year on – has published an interim report, introduced as ‘a series of “quick wins”’ by the committee’s chairman.
The report covers a wide range of topics in its thumping 281 pages – from proposals to make corporate governance more digital-friendly to agricultural technology (‘agtech’) and the potential for blockchain in the property sector – but sends out a stark warning in its introduction, which says that ‘if we [Australia] are going to compete with Singapore and Tokyo, we first need to get our house in order at home. Much progress has been made but it’s time for some recalibration. Government should not be afraid to act like in fintech and be iterative.’
The committee’s chair, Andrew Bragg, a former Ernst & Young accountant elected as a Senator for New South Wales last year and a member of the Liberal Party, warns: ‘New competition is coming from the fintech sector, which unless fostered, will leave the nation with the status quo or force Australia to buy more and more technology from abroad.’
Recommendations for open banking
The report includes a section on open banking, which became a reality in Australia after the country’s high-profile Consumer Data Right (CDR) legislation went live on 1 July.
The aim of open banking is to boost competition by enabling third parties such as fintech companies to develop new apps and services. The country’s four major banks – ANZ, Commonwealth Bank, NAB and Westpac – are now obliged to share customers’ data when requested by citizens.
Australia’s open banking era kicked off – after a six-month postponement – with just two third-party companies accredited to receive customer data from banks, with 39 more in the accreditation process.
The report references a media report published on 1 July in which the Australian Competition & Consumer Commission (ACCC) said there should be ‘about a dozen’ official data recipients by this month (September 2020). The ACCC said in that report that although many fintechs ‘wanted to be part of the system on day one, the pandemic had caused many to shift their priorities and redirect resources away from the accreditation process’.
The Senate commission report says that its members had ‘heard that for open banking and CDR initiative more broadly to be effective, the Australian public needs to be made aware of this significant reform and the opportunities it provides. Without this awareness, adoption of services provided using the CDR may be weak.’
The committee recommends that the government work with the banking industry to establish and implement targeted campaigns to educate consumers on the CDR and open banking. It also recommends that the government expand the CDR to include other financial services, starting with the superannuation (company pensions) sector and then including sectors such as general insurance.
The report also proposes that the government set up a new national body to oversee implementation of the CDR. It says ‘the governance of the CDR is overseen by three different regulatory bodies, and… consolidation of these arrangements, and regulatory arrangements for data policy more broadly, could confer significant benefits. This is an area of significant potential reform, which the committee intends to catalyse through this inquiry. A new national body will provide focus and accountability.’
‘Stocktake’ needed for government procurement
In other proposals specifically referencing fintech, the committee recommends that the government undertake a ‘stocktake to better understand the costs and complexity for small businesses, including fintechs and regtechs, in government procurement’. For example, membership organisation FinTech Australia told the committee that some guidelines automatically eliminated newer fintech businesses from tendering.
The committee’s report also recommends that the government ‘consider holding event-based challenges or initiatives’ to enable innovative fintechs to solve policy and service delivery challenges.
Separately, the committee urges that digital identity reforms led by the country’s Digital Transformation Agency be accelerated ‘in order to deliver a national, economy-wide framework for the operation of a federated digital identity ecosystem as soon as possible’. Global Government Fintech’s sister title, Global Government Forum, reported last month on delays to the country’s digital ID ambitions.
Bragg’s committee was due to table its interim report in March but its publication was put on hold due to the pandemic. The committee reopened submissions and took further evidence at hearings in the middle part of the year before finalising this report. The committee plans to present its conclusions by April 2021.