As the global fintech sector develops at a rapid clip, regulatory bodies are striving to establish safe and supportive policies. Let’s see which countries are in the lead.
Global authorities are getting to grips with fintech regulation as they inch towards a balance that will encourage competition, stimulate innovation and protect consumers. But the need to create innovative policy that supports fintechs has forced regulators to step up their game around the world.
Of those embracing the disruptive nature of fintech, the UK, Hong Kong and Singapore have emerged as global leaders.
Here, we look at what they offer and how Australia stacks up.
Based on the success of the Financial Conduct Authority’s regulatory sandbox – 90 per cent of first-round applicants have gone on to market – the UK now aims to launch a global fintech regulatory sandbox. (A sandbox allows businesses to test a new product or service in the market without a licence for a specific time.)
Theresa May’s government has also made moves to back fintechs as part of its open banking regime. The plan is to work with start-ups and traditional banks to build shared platforms and set up a new crypto-assets taskforce to help blockchain developers. Another reform includes the UK-Australia FinTech Bridge, aimed at helping UK start-ups move to Australia and compete against the big banks.
It’s a step in the direction of increased competition that industry leader Grant Bissett, chief executive of Pin Payments, would like to see in Australia. “The biggest problem from my perspective is the relative lack of competition from services that are currently only provided by banks,” Bissett says.
“There's an opportunity for the regulators to invite more competition and to enable smaller entrants to access card schemes and other sorts of back end products.”
Hong Kong understands the need to be on the front foot with fintech regulation. Last year, fintech investment in Hong Kong more than doubled to $A728.15 million, the South China Morning Post reported.
Updates to the sandbox by the Hong Kong Monetary Authority include a Fintech Supervisory Chatroom where banks and tech firms can receive feedback at an early stage of their fintech projects. Stamping out money-laundering and terrorist-financing is an important driver for regulating the sector. Underlining this is Hong Kong’s recent establishment of the Alliance for Financial Stability with Information Technology.
Australia is also expected to enhance its original regulatory sandbox framework. Draft legislation gives fintechs broader scope to test their products and services without meeting licensing requirements of the Australian Securities and Investments Commission (ASIC).
Singapore is a global fintech leader – it was among the first countries to establish a regulatory sandbox and, according to Deloitte, the Monetary Authority of Singapore (MAS) has signed more cooperation agreements than any other regulatory body in the world. In the agreement with Australia, ASIC and MAS committed to investigating joint projects and to share information on emerging market trends and their impact on regulation.
Government support for fintech is strong and last year it committed $A2.39 billion over the next four years to support the future economy. Other support structure instigated by MAS include the Innovation Lab, where start-ups can be trained and consult with financial institutions, and the International Technology Advisory Panel, which is made up of major financial institutions and fintech business leaders.
This article represents the views and opinions of the author and do not necessarily reflect the opinions of BPAY.
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