The innovation hub can be linked to a growing realisation that collaboration is required between financial sector innovators, consumer groups, academics, relevant government agencies and regulators to deal with complexity and examine opportunities from a system-wide perspective. Accordingly ASIC has also announced the establishment of a Digital Finance Advisory Committee, with representation from the fintech community, consumers and academics. The focus is on streamlining ASIC’s approach to facilitating new business models with common application processes, including applying for or varying a licence and in granting waivers from the law.

These initiatives represent a significant departure for Australian regulators for two key reasons. First, our regulatory agencies have tended to retain a low-risk, conservative approach to regulation. On an international basis, this stood us in good stead throughout the global financial crisis, when our regulatory agencies were recognised internationally for their prudent approach. But this had increasingly become a barrier to innovation.

Second, this is a highly collaborative approach, something that is generally not a hallmark of Australian business. The lack of collaboration has been a weakness of our system in generating interaction between researchers, innovators, corporates and regulators and we have been amongst the least collaborative of all OECD countries, to our cost. Bringing together these parties through the Digital Finance Advisory Committee, and fintech hubs such as Stone and Chalk, could lay a foundation for more sustainable financial services innovation.

Opening the way to greater financial innovation is especially important in an economy with such a highly concentrated financial sector. Ultimately the ability of key agencies to adapt and adjust risk levels to accommodate disruptive technologies will impact on both the domestic and international competitiveness of Australian finance sector, to the benefit of Australian consumers and businesses.