Thanks Snake for answering so clearly and comprehensively
That the big Australian banks are entrenched with the larger providers does not seem to be any vote of confidence in those larger providers?
.....And you say no-one has (yet) been able to tap into credit information on businesses with a turnover of less than $50M?
This is interesting as well.
-If KYK was able to crack the ‘code’ (of privacy/outrage/invasive Big Brother stuff?), it might be able to turn into a billion dollar company after all?
Trying to learn a little more; in terms of opposition, the RegTech sector does seem to be burgeoning;
See this UK site’s view of the ‘top 100, as of three years ago; [The 100 most innovative RegTech companies and start-ups November 21, 2017 ].
(Notably ASX company ISX was on the list back then but Kyckr did not feature.)
Kyckyr was also, more recently, not on the list of winners in the Australian RegTech Association awards [Annual Winners February 2020], but CBA was!?
In the spoiler is a share of a bit more, roughly curated, general information in case anyone else is curious about this sector but largely bemused;
On 11 September 2019, the Australian Senate resolved to establish a Select Committee on Financial Technology and Regulatory Technology.
A link below says it had received 123 submissions by January 30, 2020.
Fintech review not a battle between start-ups and big business, says Andrew Bragg
Grace Wong, co-founder of LIVEN, says the regulatory response to blockchain has been ‘slow and vague’. Picture: Penny Stephens.
The federal government has kicked off a review of Australia's fintech industry in a bid to improve the nation's competitiveness, as entrepreneurs call for more support and a visa shake-up.
- DAVID SWAN
TECHNOLOGY EDITOR
- 12:00PM OCTOBER 23, 2019
Liberal senator Andrew Bragg has secured parliamentary support to set up a Senate select committee inquiry into financial and regulatory technologies, and on Wednesday released an issues paper highlighting current hurdles facing the sector.
"Australian consumers and businesses will reap the benefits of technology but only if our policies are properly calibrated," the NSW senator said.
The financial sector represents 11 per cent of Australia's GDP.
"This inquiry is not about big or small businesses or start-ups; it is about all Australian businesses being as innovative as possible to create the next wave of employment growth," Mr Bragg said. "Australia still has much work to do to transition and advance our economy."
The inquiry will look at the barriers to the uptake of new technologies, examine the industry overseas and consider ways it could reduce business compliance costs while ensuring Australia's laws and regulations are met.
One other key issue is whether superannuation funds will be required to sign up to a data-sharing regime.
Fintech in Australia covers a range of services including automated financial advice, insurance risk management, lending marketplaces, international and domestic payments and cyber security.
‘Lived experience’
Mr Bragg is calling on fintech companies to tell their 'lived experience' and make submissions to the inquiry. The deadline is December 31, 2019.
Yanir Yakutiel, the CEO and founder of business loan fintech start-up Lumi said Australia needed to emulate the success of innovation hubs like Israel and Silicon Valley — rather than be content being compared to the UK and Singapore — to ensure entrepreneurial success.
"The biggest changes to support this is need to be made to our current immigration and education systems," the executive said. "Australia needs the brightest and smartest to be able to call this country home and add to the startup economy, while our education system should also be more flexible in letting the people who come to study also stay and work for our startup businesses in particular.
Senator Andrew Bragg. Picture Kym Smith
"Our highly concentrated banking sector is another source of concern. It is extremely skewed towards property lending which makes it difficult for small businesses and startups to access capital. Our banking system has been burdened with extreme regulatory and compliance costs which has effectively made them nonactive with non-prime lending.
"The big advantages the banks have is a huge customer base and they are able to borrow easily. For a disrupter to come in and gain scale, businesses need to offer something that compensates their initial lack of advantage. The environment is competitive, but with an obvious skew towards the banks."
Attracting talent
Founder and managing partner of fintech-focused venture capital firm Seed Space Dirk Steller meanwhile said that Singapore, for example, is throwing hundreds of millions of dollars developing the fintech ecosystem through incentives such as tax relief, regulatory reform, and grants.
"The ability for Australia to attract offshore talent remains a key challenge for our government and that should certainly be a key priority for this select committee," he said. "Not only is Australia geographically isolated but it can be really hard to secure visas for skilled workers. The question at the heart of this issue comes back to government support.
"Connectivity with the UK is key, given similarities in regulation and legal frameworks, and importantly to take on some learnings from the UK which is several years ahead of Australia in the development of its fintech ecosystem.
"As highlighted by the issues paper, the UK-Australia Fintech bridge is a fantastic tool, but so far it has been more of a one way street and we need to do more to draw benefit for Australian fintechs from that relationship. Fintech bridges could be established with other nations, as the UK is currently doing."
‘Slow and vague’ on blockchain
Grace Wong, the co-founder of dining and restaurant payments fintech Liven, said the regulation of blockchain by the federal government had been slow and vague.
"We find it interesting that blockchain isn't even mentioned once in the federal budget. This is not surprising given DTA’s chief digital officer Peter Alexander told a Senate inquiry a year ago to wait for a 'standardised blockchain'," she said.
"In my opinion that misses the point, like waiting for a universal mobile operating system before ever buying a phone.
"The problem lies in the government thinking it is in a pretty similar state to most progressive governments looking at blockchain and trying to understand it but that's not the case. Governments and industries alike around the world are racing to reap the benefits of this technology, from delivering productivity to security and efficiency gains.
"The last budget has left industry with more questions than answers mostly about how serious they are in becoming a leader. Sitting on the sidelines waiting for other countries to make breakthroughs is not innovation."
EFTPOS Australia hoping to enter the digital identity game (April 14, 2020)
[Jan 30, 2020; “Regulatory hurdles and anti-competitive conduct from the major banks have been cited as commonly faced issues for newcomers in their quest to enter the Australian banking landscape”]
https://www.afr .com/companies/financial-services/regtech-market-could-become-an-australian-high-tech-fossil-20200124-p53ub6
Regtech market could become an Australian 'high-tech fossil'
James Eyers Senior Reporter
Jan 28, 2020 – 12.00am
For young technology companies seeking to work with banks to automate compliance processes, "it’s a perilous time", says Lisa Schutz, the founder of Verifier, which has developed a new way for borrowers to prove their income to a lender.
It really shouldn’t be.
The Hayne royal commission and the bombshell AUSTRAC cases against Westpac and Commonwealth Bank have created a burning platform. They highlighted the need for incumbents to improve legacy technology systems, along with the cultures that failed to identify – and nip in the bud – non-financial risks.
Lisa Schutz, CEO of Verifier: "“Regtech is at risk of becoming one of Australia’s high-tech fossils.” Isabella Porras
Building new approaches to law and regulation should be a comparative advantage for Australia. Given the respect with which the legal system and regulators are held in abroad, regulatory technology could become a new export industry for the future.
It's a global market worth more than $1 trillion.
But for Schutz – and other start-up founders whose submissions to a Senate select committee on financial technology and regulatory technology have been published in the past fortnight – it's been very tough to get any traction in the market.
“Despite lots of goodwill for regtech, the role of government and regulators is poorly understood, the regulated entities are reluctant to experiment and, overall, the market is relatively sluggish and frustrating,” she says.
“Regtech is the ‘X tech’ sector with most promise, but also at the most risk of becoming one of Australia’s high-tech fossils.”
Concerns that banks will fail to grasp an opportunity to modernise the back-end processes that have tripped them up come just as the government embarks on ambitious policy reform to liberate data flows across the economy, creating more seamless digital interactions at the consumer front-end.
The Senate select committee, which is being headed by Liberal Senator Andrew Bragg, is determining policy changes to attract more skills and capital into the technology sector, including regtech. It wants to ensure that Australia is coordinating management of the data economy as well as the likes of Singapore and Israel.
Governance of data was one of the hottest topics at Davos last week, where Microsoft CEO Satya Nadella said data privacy should be considered a human right.
Last week, the Morrison government announced a new review into its "consumer data right" (CDR) policy, to ensure it was keeping up with rapid developments abroad.
Schutz has given plenty of thought to consumer data rights, given her company, Verifier, has been designed around putting customers in control of their data, the same philosophy driving CDR. But she's worried that the power of the new right is poorly understood, and needs to be recast to ensure its success.
Digital 2050
Schutz suggests many people find the data rights topic abstract, and get anxious thinking about how their data might be used by those they share it with.
As a result, the whole narrative must change.
“People don’t know what ‘CDR’ is – but it is about how we will reveal ourselves to the digital world to get things done online. It’s about digital personhood," she says.
“It’s better to think about the consumer data right reforms as the creation of Australia’s digital infrastructure that will provide the capabilities that all consumers and businesses engaging online will be using for the next 50 years. It is about how Australians and companies will live and participate online in 2050. This needs to involve frictionless experiences.”
Verifier's technology reduces friction between customers and lenders, helping to streamline loan origination processes by eliminating paper-based, manual checking of income and also expenses. It can be deployed to ensure that banks can lend with confidence that they're compliant with responsible lending laws.
Schutz says the government should be trying to make it safer for regulated entities to use new approaches to automate compliance – and for start-ups to design them.
She has suggested that the Senate committee call for a "design box" method to help avoid sudden changes in approach by regulators. "It could empower regulators to give a ‘not no’ answer when approached about the design of innovative approaches to managing regulatory compliance,” she says.
Government procurement policy changes could also encourage the public sector to turn to regtech solutions and support local entrepreneurs.
Banks also need encouragement to consider using new technologies. A "safe harbour" could boost buyer confidence by mitigating the risk of adverse regulatory actions if deficiencies are uncovered because of trying new solutions.
Schutz says few banks are innovating around responsible lending processes, despite the royal commission putting them on notice about the importance of compliance with the laws while the government is keen to ensure lending that continues to flow to support the economy.
“We need to find ways to provide them with a safety net when they are directionally getting it right, and not throw the book at them when, inevitably, cases of substantial hardship occur, which may have been theoretically – but not operationally – foreseeable, at the time the loan application was made.
"There is a risk that remediation efforts in the financial services sector, to address sins of the past, is killing investment in regtech transformation, which is capable of yielding better compliance outcomes in the future."
Schutz told the Senate committee this was not theoretical – Verifier had been told by one financial services organisation that a trial of its regtech product was on hold "because we are too busy remediating to put time into a pilot".
... So thanks again Snake ..... Now, instead of feeling I know basically nothing about RegTech, I think I know next to nothing - a huge improvement : ).
As far as Kyckr goes - it seems to me that if everyone out there is essentially providing the same service presented in different coloured wrapping, it is all about salesmanship and market share and loyalty.
...And strong alliances - which reminds me the reseller agreement with “listed-for-sale” $1.5 billion illion was announced on Monday, September 23, 2019 .... just four days after Richard White of WiseTech had come on board as a cornerstone investor on Thursday September 19.
By mid November that auction process had ground to a halt.
It all seems to have gone very quiet on that front.
I wonder if the enthusiasm for KYK on Friday had anything to do with association with that entity and progress on the sale?
cheers
