Australia eyes Japanese market with new fintech innovation agreement
The Australian Securities and Investments Commission (ASIC) has announced the completion of a framework for co-operation with the Japan Financial Services Agency (JFSA) aimed at promoting innovation in financial services in both countries.
The framework [PDF] will see the JFSA and ASIC share information and support the entry of fintech businesses into each other's markets, with ASIC flagging the Japanese economy as the third largest in the world for services -- including financial services -- accounting for approximately three quarters of GDP in the country.
According to ASIC, the agreement will enable both parties to refer innovative fintech businesses to each other for advice and support via ASIC's Innovation Hub -- aimed at helping fintech businesses navigate Australia's regulatory framework without compromising investor and financial consumer trust -- and the JFSA's FinTech Support Desk.
It will also provide a framework for information sharing between the two regulators which is expected to enable the JFSA and ASIC to keep abreast of regulatory and relevant economic or commercial developments in each other's jurisdictions, and help to inform local approaches to regulation.
In a statement, ASIC Commissioner John Price said the JFSA has been actively involved in encouraging fintech through a range of measures including the modification of the legal system to enable financial groups to invest in finance-related IT companies more easily.
Price also said the Japanese regulator has been working on the establishment of a legal framework for virtual currency and Open API which is expected to encourage the country's fintech startups to engage with financial businesses globally.
This is the second agreement signed between ASIC and a finance regulator in Asia this month, with the commission kicking off an arrangement with the Hong Kong Securities and Futures Commission (SFC) to provide mutual support to fintech businesses from Australia and Hong Kong seeking to operate in each other's markets.
Similar to the agreement signed with the JFSA, ASIC and SFC will refer fintech businesses to each other for advice and support via ASIC's Innovation Hub and its Hong Kong-based equivalent, SFC's Fintech Contact Point.
ASIC has previously entered into referral and information sharing agreements with Kenya, Ontario, Singapore, and the United Kingdom, and released its regulatory sandbox policy in December to allow fintech businesses to test certain products or services for a limited period of time without having to hold an Australian financial services or credit licence.
A report from Capgemini earlier this week suggested that banks address the "threat of disruption" by combining their strengths with those of fintech startups.
Fintech startups have made their presence felt, with Capgemini noting that non-traditional financial providers are moving the needle in attracting customers; nearly one-third of banking customers are already banking with at least one non-traditional provider.
However, they are yet to achieve significant market share, with Capgemini highlighting that there is still action the traditional players can take, and the threat posed by tech-driven financial firms leaves a "far from grim" outlook for traditional banks.