Federal treasurer Scott Morrison has suggested the wave of fintech disruption will force Australia’s banks to lift their standards without the need for a royal commission which he says would undermine confidence in the industry.
After a string of banking scandals over recent years, the government has committed to calling the CEOs of the major banks before a backbench parliamentary committee but resisted calls from the opposition for a sweeping royal commission investigation.
Speaking on Business Insider’s Devils & Details podcast, the Treasurer said the calls for a royal commission had damaged the reputation of Australia’s financial sector internationally in government and business circles.
“When we’re overseas and you have people come up to you and we have others saying there should be a royal commission into the banking industry, we have overseas agencies, governments, or others coming to us – and banks – and saying, ‘What’s wrong with Australia’s banking and financial system?’”, Morrison said.
“That is not good. There’s nothing wrong with Australia’s banking and financial system. So why we would be so reckless to … undermine that confidence, I think, is very concerning. The government will maintain our position on [the royal commission].”
Morrison said competition from fintech disruption “will get the same response out of the banks”.
“The fintech companies doing what they’re doing will force the sort of focus on the customer which is coming from the banks, and that needs to continue. The pressure, the tension in the cord must be there. And I think fintech does that, but it needs a regulatory environment which lets them do that.”
The Coalition has introduced a range of legislative changes to support Australia’s growing fintech sector, including an ASIC-monitored “regulatory sandbox” which allows for testing of key aspects of novel financial products, including the management of dispute resolution and redress avenues for consumers.
The treasurer said financial technology was “one of, if not the most exciting sectors in the economy today” and he had been impressed by “its ability to be transformational for businesses more generally” across the country, citing an encounter with a farmer at a small business summit who said financial technology presented the biggest opportunities for his operations.
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