“As technology changes over time and new developments emerge, it is natural to experience disruptions that challenge the prevailing regulatory framework.”
This is how ASIC’s commissioner John Price framed the challenge and opportunity facing regulators in a digital world. He was speaking at the Monash Centre For Commercial Law and Regulatory Studies Symposium in Melbourne as he outlined the approach Australia’s financial regulator is taking towards the rise of digital technology.
In particular, he was there to promote the work of ASIC’s Innovations Hub which exists to foster innovation which can help Australia’s fintech start-up community navigate the complex world of financial regulation.
Australia is proud of its booming fintech sector. It now represents 16% of start-ups in Australia and accounts for more than $700 million of venture capital. Australia is now the second biggest alternative finance market in the Asia Pacific region, behind only China. The Government has been active in fostering the market and has supported the sector with funding and a range of accelerator programs.
ASIC, like many other global regulators, sees its role as being one to support innovation, while also maintaining protections for consumers. It is a fine balancing act and the Innovation Hub is key to helping it to do so.
To do this, the hub is broken down into five components:
- Engagement with fintech and regtech entities
- Informal help through the website including tailored guidance for innovative businesses to access information and services through the website.
- A senior internal committee to analyse new business models.
- A digital finance advisory panel which provides ASIC with advice in this area.
- The regulator is drawing on experience from around the fintech community, academia and consumer advocates as well as financial regulators.
In addition, he pointed to their sandbox regime which:
“includes a world first fintech licensing exemption that eligible fintechs can make use of as they prepare to go to market.”
A key part of his speech focused on one part of the sector which is obviously fairly close to our hearts at Enforcd, regtech. This sector has grown massively in the past few years and, as he acknowledges, offers a number of opportunities.
“Although it is not something that we at ASIC regulate directly,” he said, “regtech is something we are keenly interested in, both as a consumer of products and a facilitator of engagement more generally to ensure innovation in this area is utilised.”
He sees it as playing a role both as a facilitator for companies in building a ‘culture of compliance’ by saving time, streamlining operations, increasing education and identify learning opportunities.
From the regulator’s perspective, they are also acting as customers of the regtech space. This technology has a number of applications which can help the regulator perform its role more effectively.
There are some complex questions, both about regtech and the wider fintech sector, so they will balance their approach to the space both as regulator and a user of technology. For all these questions, though, he believes the potential is enormous as long as regulators can adopt the right attitude.