The federal government has released its statement on Australia's fintech future, saying that financial technology is transforming the nation's financial system, with the ability to revolutionise how consumers and businesses interact.
In its Backing Australian FinTech statement [PDF], the government says it wants to see fintech in Australia become a focus of creative thinking and business activity, with Treasurer Scott Morrison adding that fintech is going to revolutionise how consumers and businesses interact
"Australia already has a sophisticated, competitive, and profitable financial sector underpinned by a strong regulatory system," Morrison said.
"As financial services become more globalised and technological disruption more relevant, we need to keep pace with innovation in banking and finance to stay competitive."
As outlined in its statement, the government's actions include ensuring access to concessional tax treatment for venture capital investments in startup fintech firms, and commissioning the Productivity Commission to outline options to increase data availability and access to facilitate new products and better consumer outcomes.
Morrison said the government also intends to take action to address the "double GST" treatment of digital currencies such as bictoin.
The government said it will also work with the fintech industry on further reforms to allow for changes to be made to the Crowd Sourced Equity Funding (CSEF) framework it published last year. Suggested changes include allowing all companies, regardless of assets and turnover, to be eligible for Equity Crowdfunding; removing cooling off periods and allowing platforms to use their discretion to cancel an investment for legitimate reasons; and reviewing Australian Market Licence requirements for crowdfunding intermediaries.
It will also consider increasing the assets and turnover threshold used to determine eligibility for equity crowdfunding to AU$25 million, and reduce the cooling off period for investors into crowdsourced equity-funded projects to 48 hours.
In addition to outlining its fintech position, the government has appointed an advisory board, which will be charged with helping ensure Australia has an internationally competitive environment for fintech and that the country can attract international innovators to its shores.
The FinTech Advisory Group is chaired by chairman of startup incubator Stone & Chalk, director of Westpac Bank, and former CEO of AMP Craig Dunn.
Other members include: Simon Cant, co-founder and managing director of Reinventure; Matt Symons, co-founder and Head of Strategic Alliances and Partnerships at Society One; Nerida Caesar, CEO and managing director of Veda; Kelly Bayer Rosmarin Group Executive, Institutional Banking & Markets of Commonwealth Bank; Ben Heap, founding partner of H2 Ventures; Claire Wivell Plater, owner of The Fold Legal Pty Ltd; Asher Tan, co-founder and CEO at Coinjar; Libby Roy, Managing Director of PayPal Australia; Jost Stollman, executive director and CEO of Tyro Payments; Jonny Wilkinson, co-founder and managing director at Equitise; Scott Farrell, partner, King & Wood Mallesons; Charlotte Petris, founder and CEO of Timelio; and Stuart Stoyan, founder and CEO of MoneyPlace.
The statement said the advisory group will explore increased facilitation of digital advice models, regulation technology, the uptake of blockchain technologies, the tax treatment of digital currencies, the evolution of the Australian crowdfunding framework, data transparency and aggregation, and emerging insurance models.
The government said it will continue to work with the fintech industry, as well as with the states and territories, to capitalise on the competitive advantage and significant opportunities it believes Australia currently has.
According to the statement, services industries now account for more than AU$900 billion of Australia's AU$1.6 trillion economy; and the services sector accounts for a significant share of employment with around 9.5 million Australians -- or 80 percent -- working in the services sector. The statement also says that Australian exports of services represent around a fifth of exports, which is far more than rural exports, and are of a similar size to manufactures exports.
The government also said that Australia's financial services sector is the largest contributor to the national economy, contributing around AU$140 billion to GDP over the last year.
"In Australia we have a sophisticated, competitive, and profitable financial sector and a strong regulatory system," the statement said. "The four major banks are among the world's largest banks by market capitalisation and all rank in the top 25 globally for safest banks; they are also some of the most profitable in the world."
"This is going to have big implications for demand in the future," Morrison said. "We need to be part of these changes and we have got to work out the best way to engage with fintech and prepare for the financial system and economy of the future."
The fintech statement forms part of the federal government's AU$1.1billion National Innovation and Science Agenda it unveiled in December.
According to the statement, fintech is expected to have an important role to play in Australia's future, as the sector is centred on stimulating technological innovation, so that financial markets and systems can become more efficient and consumer focused.
"Companies that embrace innovation, that are agile and approach change confidently are more competitive, more able to grow market share, and more likely to increase their employment," the statement said. "More jobs and more growth -- that is the focus of the government -- and, with that focus, we want to help innovators contribute to defining Australia's competitiveness and agility in our fast-growing Asia-Pacific region.
"Fintech innovators are disrupting the market place for incumbents and reshaping the approach to financial services in areas such as: Primary banking accounts, payments, capital markets, investment management, and insurance.
"New approaches like crowdfunding, peer-to-peer lenders, mobile payments, digital currencies such as Bitcoin, and robo-advisers could benefit consumers by increasing choice and stimulating more competition."
In addition, the government said it has been working with the Australian Securities and Investment Commission (ASIC) on the development of a "regulatory sandbox" that will enable firms to manage regulatory risks during testing stages, thus reducing the cost and time to market products.
At the same time, any "sandbox" will need to provide for important consumer outcomes such as fit and proper checks, dispute resolution, and consumer redress arrangements, the government said.
"We need a regulatory environment that provides consumers with confidence while not unnecessarily restricting the opportunities for innovation," it said.