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Senate creates select committee on fintech and regtech

James Eyers, Senior Reporter, AFR

Sep 11, 2019 — 5.32pm

The government wants to better co-ordinate its support of the financial technology industry, backing the establishment of a Senate select committee that will examine issues including the implementation of ''open banking'' and start-up access to the real-time payments system.

The committee is expected to be chaired by Liberal Senator Andrew Bragg, who moved a motion to establish it on Wednesday afternoon. It will spend a year investigating the policy settings for fintech and regulatory technology (regtech), global developments and barriers to uptake.

The committee will involve the major banks, start-ups and potentially global technology players in hearings and submission processes as the government looks to lift competition in the financial system via its ''consumer data right'' (CDR). It will monitor the introduction of open banking as customer data is set to flow as part of the regime from February and the government plans the roll-out of the CDR to the energy sectors.

It is also expected to examine how banks are deploying technology to improve compliance in the wake of the Hayne royal commission, access to the ''new payments platform'', which has been an area of concern for the Reserve Bank and Productivity Commission, and APRA's licensing regime for start-up banks.Attempts to ensure a whole of government approach to fintech and regtech comes as digital banking and payments accelerates across the region, most notably in China, where Tencent and Ant Financial dominate the payments system.

The committee may also look to Singapore, which has a well co-ordinated bureaucracy on data policy.

In contrast, Australia has various regulators with responsibility for different aspects of policy. For example, the ACCC is the main regulator of the new data right, ASIC is leading development of regtech, the RBA oversees the payments system, and APRA has been taking a key role on cyber security.

Senator Bragg formerly worked in the financial services industry as policy chief of the Financial Services Council.Prime Minister Scott Morrison pushed the development of fintech policy when he was Treasurer, including open banking and facilitating the licensing of start-up banks, and the government's support for the committee recognises laws in this area need to adapt to fast-changing technology and global dynamics.

After May's federal election, the government named Senator Jane Hume as its first minister for financial technology.At meetings in Canberra on Tuesday, Westpac chief executive Brian Hartzer indicated the bank would be willing to work with the committee, while the Australian Banking Association is also expected to encourage its membership to support it.

By calling out regtech, the committee will be keen to understand how technology is helping to implement the recommendations of the royal commission.

Some of the major banks have begun using artificial intelligence technology to improve customer service, and the committee plans to explore opportunities, and barriers, for regtech companies working with banks and how they can help banks reduce costs and strengthen compliance.

The committee may also examine the role of agriculture technology as a potential area of competitive advantage for Australia given the size of the rural sector.Agtech can also assist financial services companies by helping to generate data to enhance the assessment of insurance risk, the value of property security and to predict cash flows which can determine the appropriate level of lending.