Budget 2017: Government implements measures to boost fintech industry

Australia's Immigration Minister Scott Morrison smiles during an interview with Reuters in Phnom Penh September 26, 2014. Reuters/Samrang Pring

The Turnbull government expressed its commitment to promoting FinTech innovation and growth through several new measures aimed at advancing the industry. In its 2017-18 Budget, the government loosened up the legislative 15 percent ownership cap for innovative new entrants through legislative change or existing ministerial discretion.

Open Gov Asia is reporting that the Australian government will help startups and innovative small businesses by making it easier for them to raise capital. Crowd-sourced equity funding (CSEF) will be extended to proprietary companies, which will open it up for a more comprehensive range of businesses, including FinTech companies as they obtain extra sources of capital.

With CSEF, individuals can make small financial investments in a company and obtain equity stake in return. The government legislated a CSEF framework for public businesses in March and will start later this year.

Moreover, the government welcomed APRA’s review of prudential licensing arrangements. The prohibition on the use of the term “bank” will be removed by some ADIs as there are reputational advantages for start-ups if they can label themselves as one.

FinTech Australia declares budget a win

FinTech Australia, the industry body for fintech start-ups, called the federal budget a winner and commended measures that will help entrepreneurs compete with the big banks. Chief executive Danielle Szetho said the initiatives of the Australian government were “a huge step forward” to foster “a globally competitive Australian fintech industry.”

“It is pleasing to see that the government has clearly used the budget to reaffirm its commitment to Australia’s fintech industry, and sees this industry as a driver of increased consumer choice and jobs growth in financial services,” Business Insider quotes Szetho. The FinTech Australia boss had nothing but praises for Treasurer Scott Morrison for what she described as a budget that presented a new statement about how he will create competition and accountability in the nation’s banking system.

FinTech Australia said they were now welcoming the swift implementation of the government’s initiatives, given that the country was a fast-moving global environment in setting up a regional fintech advantage. Fintech RateSetter has also welcomed the announcement positively.

Daniel Foggo, RateSetter chief executive, also commended Morrison for supporting the Productivity Commission’s recommendation to open up bank data. He said the decision showed that the government is committed to boosting competition in financial services in Australia and that it stood up to the banking sector lobbyists, adding that the changes will allow consumers to easily switch to non-bank financial service providers.

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