At the recent World Economic Forum it was noted that ninety per cent of the data we use today has been created in the past two years. That’s a frightening – but also very excititng – statistic.
The ability of new technology to capture and process data, in real time, is changing how business is done, how products and services are conceived in the new economy and the way consumers participate in this process.
Financial technology – or FinTech – is lubricating this transformation. The catalytic impacts of Fintech and it’s potential to unleash a new era of competition, innovation and job creating productivity in our economy is inestimable at this point, and very worthy of encouragement.
At a recent doorstop interview whilst attending the G20 Finance Ministers and Central Bank Governors Meeting, Mr Morrison made the following comments:
“Our challenge as a country is to be more productive. Every dollar in the budget has to carry its weight. Every tax arrangement has to achieve its mark and do its job in the same way our exchange rate mechanism does its job in our economy, in the same way our monetary policy does its job – every inch of progress we make economically is going to be dependent on all of these aspects working well together. Competition policy will be as much driven by the innovations we can drive in FinTech as it will in any other area of regulatory action.”
Some comments from Mr Morrison’s AFR opinion piece are as follows:
FinTech is not just about digitising money, it’s about monetising data. It’s about how we can create and capture the value add from data, previously limited by the technology we had available. It is the second round value surge that is now starting to flow from an increasingly digitised economy.
Financial services providers now talk about attributes, or insights into consumers, not just in the tens of thousands but in the hundreds of thousands and millions. Businesses and authorities now have structured access to almost unlimited data, especially with the advent of social media, that sophisticated algorithms can quickly interrogate and transform into new services and products.
This is not old-style data mining but deep learning that permits previously unimagined insights and information that in turn allows more individualised products and services, and more efficient markets and systems.
Much of this is taking place outside the official sector, as traditional regulation was built for a different time. It is this positive disruption that a successfully transitioning economy, like Australia, can and must benefit from and why the Turnbull Government is now taking such a keen and close interest as part of our innovation agenda. Just as the Internet has empowered people around the globe through access to information, financial technology is reducing information asymmetry in the marketplace and thereby helping to mitigate risk and promote more efficient allocation of scarce resources.
New Fintech Advisory Group launched
In late February the federal government announced the formation of a new Fintech Advisory Committee to complement the Innovation Collaboration Committee being established under the Financial System Program.
The advisory group will be working closely with the FinTech Association, FinTech Australia which is just formed and will be trying to continue to drive a roadmap of how to ensure that Australia is globally competitive as a FinTech regulatory environment.
Fintech is not without many risks of course, something which the Treasurer has acknowledged.
“(Fintech has the ) potential to disrupt how financial systems work globally and it is something I am sure you would all appreciate,” he said.
“As governments we need to understand how we can facilitate it, how we can enable it, to understand what sort of protections need to be in place but it is very much moving to a potentially very different form of regulation and it means different skills for our regulators, a different understanding because how they will facilitate commerce and how that impacts on how all those businesses operate is an enormous opportunity for Australia. We want to be at the forefront of that. ”