The industry body for fintech startups, FinTech Australia, has declared the budget a winner, citing multiple measures that will assist entrepreneurs challenge the big banks.
The budget included an expansion of the regulatory sandbox, which allows fintech startups to pilot products without requiring a full licence; a commitment to open up big bank data to startups; and reducing requirements for businesses to act as and call themselves “banks”.
FinTech Australia chief executive Danielle Szetho welcomed the announcements, saying the initiatives were “a huge step forward” to foster “a globally competitive Australian fintech industry”.
“It is pleasing to see that the government has clearly used the budget to reaffirm its commitment to Australia’s fintech industry, and sees this industry as a driver of increased consumer choice and jobs growth in financial services,” she said.
The regulatory sandbox, first established in December, has been extended from a 12-month program to 24 months, while an independent review into opening up bank data will be conducted this year with a view to opening up access next year. The budget also proposed to loosen shareholder requirements for banks and allow businesses with less than $50 million in capital to call themselves banks — both measures that will help fintechs to compete in the mainstream consumer market.
Daniel Foggo, chief executive of fintech RateSetter, commended treasurer Scott Morrison for supporting the Productivity Commission’s recommendation to open up bank data.
“In requiring big banks to give consumers greater control over their own data, the government has stood up to the banking sector lobbyists and shown it’s serious about boosting competition in financial services in Australia.”
Foggo said that such reform would allow consumers to easily switch to non-bank financial service providers.
“Open data has real potential to drive competition, spur on the development of Australia’s fintech sector and ultimately save consumers and small businesses a significant amount of money.”
Xero Australia managing director Trent Innes was more cautious in his reception to opening up bank data, saying it needed to be “done in the right way”.
“We hope that any moves to create a data sharing framework are handled thoughtfully,” he said.
“This is not about fintechs versus banks — it’s about giving individuals and small businesses access to their data to use on the platform of their choice. We have worked with more than 110 financial institutions globally, including 70 in Australia, to develop close integrations with banking data, so we know the power and impact that this information can have.”
ZipMoney chief strategy officer Dr Tommy Mermelshtayn said that the government hasn’t gone “far enough”.
“Commissioning a report, while promising, does not put the wheels in motion,” he said. “We run the risk of an inconclusive report, sandbagging by big banks and even a change of government which could derail this critical advancement.”
FinTech Australia’s Szetho urged “speedy implementation” of the budget proposals.
“Australia is in an extremely competitive and fast-moving global environment when it comes to establishing a regional fintech advantage,” she said.
The government on Tuesday also scrapped the GST on cryptocurrency purchases, which will remove the current double taxing on consumers and startups that handle currencies such as Bitcoin.
More budget coverage:
- BUDGET 2017: WHAT YOU NEED TO KNOW
- NEW TAX, BONUSES HELD FOR YEARS: Australia’s top bankers are the budget’s biggest losers
- A new visa will let citizens bring their foreign-born parents to Australia for up to 5 years
- How the 2017 budget will affect millennials who like smashed avocado toast
- People who smoke ‘rollies’ because they think it’s cheaper are about to be taxed the same amount as packet cigarettes