Every day, the established financial services industry is being disrupted and enhanced by new entrants. These innovators are harnessing technology that delivers services in more relevant and convenient ways to Australian businesses and consumers.
When we consider that, globally, FinTech investment reached an estimated US$20 billion in 2015, a jump of around seven‑fold over the last three years. It is clear that developing our FinTech industry here will not only help drive expansion and growth in our financial exports, it will also deliver benefits to Australians through new services that create value or bring efficiencies. Indeed, with our financial services sector being the largest contributor to the national economy, advancements in R&D represent a crucial opportunity for innovation in a key services sector of the economy.
Australia's fledgling but flourishing FinTech is attracting talent, promoting innovation in Australia's financial services industry and exporting talent abroad, such as:
- incubators (Stone & Chalk and Tyro);
- venture capital funds with a focus on FinTech (H2 and Reinventure);
- personal and business finance (SocietyOne, Prospa, Ratesetter, Spotcap and Moula);
- capital market technology (OzForex and Pepperstone);
- payments providers (Tyro Payments and PromisePay);
- wealth management providers (Stockspot, Simply Wall Street and PocketBook);
- business enabling technologies and data analytics (Avoka, Metamako, and Quantium); and
- crowdfunding platforms (Equitise, TMeffect and CrowdFundUp).
Australia's existing financial expertise, resources and infrastructure, including our world‑class regulatory and prudential regimes, mean we are well positioned to compete in the development of innovative financial products and services. Growing our FinTech industry will help Australia maintain and build on our existing comparative advantage as a regional financial centre and provider to key regional markets.
Australian‑based firms are seeking to position Australia as a centre for excellence for funds management, while fund managers are rapidly expanding their operations globally, particularly in the Asia‑Pacific region. In this growing region Australia is recognised for its innovation and sophistication in the provision and administration of managed funds products.
Asia's growing middle class and the transition of the Chinese economy to a more consumption based economy will provide significant opportunities for Australian services exports, including our financial services sector.
Export opportunities into China
China is Australia's number‑one export market and import supplier. China's share of Australian exports has increased from less than three per cent in 1991–92 to around 28 per cent in 2014–15.
China is already Australia's largest services market, with exports in services valued at $8.8 billion in 2014–15. China's share of Australia's service exports has increased from around three per cent in 2000–01 to around 14 per cent in 2014–15.
The China–Australia Free Trade Agreement (ChAFTA), which entered into force on 20 December 2015, secures a range of financial services commitments from China, including provisions on transparency, regulatory decision‑making and streamlining of financial services licence applications.
A financial services committee will be established under the agreement providing a formal mechanism for engagement between Chinese and Australian financial regulators on issues of mutual interest
The Government is committed to expanding opportunities for the export of financial services across the region. For example, we are actively working with regional partners to develop the Asia Region Funds Passport. The Passport will facilitate cross border trade in managed investment schemes between member countries by either waiving or diminishing key regulatory impediments to trade.
As a region driven by digitalisation and a large population base in the region without a traditional banking account, the Asia‑Pacific region represents a unique opportunity for Australia. Australia's stable financial system and emerging FinTech sector offers global financial services institutions, and new entrants, opportunities in a rapidly expanding domestic market and an ideal location for servicing markets in the Asian time zone.