New analysis clarifies Australia's position when it comes to fintech, with the consensus that if we want to become a global leader in the fintech sector, we'll need to push for it. A new Monash Business School (Australian Centre for Financial Studies, ACFS) analysis, part of the research project Funding Australia's Future, has four research papers on the growth of fintech in Australia, what the future landscape might look like, and what fintech can do for the financial sector in terms of competition.
The research project has been going since 2014, commissioned with the financial sector involved, to see where the Australian fintech industry could take us. The papers are to help the financial sector to understand where it sits, and where it could sit in future. Economic growth is a key feature of the reports.
The full four stages include:
Stage one was set to create a framework to put fintech into context in the Australian financial landscape, with David Link (Verrency) and Professor Rodney Maddock (ACFS). Many fintech startups take a long time to organically grow, and therefore a long time to deliver any value, with private value possibly differing from social values in these companies. Fintech may be great at lowering costs associated with finances by creating greater efficiencies.
Stage two was a study into the impact of international policy and regulation on growth in fintech, with Deborah Cope (PIRAC Economics). The paper explained that care was required in shifting policies so competition was favoured, so that fintech did not benefit one part of our society or industry at the expense of another. Breaking down regulatory barriers will be key for Australia's fintech industry to blossom.
Stage three looked at post Australian Financial System (Murray) Inquiry developments in innovation and fintech policy, with Professor Kevin Davis (ACFS).
Stage four is a look into cryptocurrencies, institutions, and trust, with Dr John Vaz and Dr Kym Brown, both from Monash Business School. Nakamoto, the founder of bitcoin and the developer of blockchain technology, argued that the blockchain would eliminate our need to use financial institutions altogether, since a financial institution is a middleman. This stage of the paper looks at how a change to one part of the finance industry can change other parts, sometimes significantly.
The project is an evidence base to see how changes in one area of the finance sector might impact others, understanding how fintech can create value for our financial systems and for the economy. The regulatory system may need adjustments to even out increased competition, while protecting consumers.