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Regulation & Financial Innovation in Australia

ASIC on the Fintech start-up scene. The balancing act between regulation and innovation.

ASIC's views and standing on hot topics: Roboadvice – Equity crowdfunding – Crypto currencies – Financial services licencing

@biznexstrategy @ASIC_connect #fintech or


ASIC and Financial Innovation 15/09/2015

There has been a lot of media lately on fin-tech concepts, disruption in financial services, new business models, the overall need for support across start-ups worldwide to foster innovation and the Sydney start up scene is commencing to gain traction.

I recently attended a really interesting presentation trying to bridge the gap between financial services regulation and innovation, the main purpose of the meet up was focused on ASIC's efforts to support fintech activity in Australia.

Worth noting

ASIC representatives commented on the importance of waiving legislation that would be regarded as ineffective and the need for ongoing reviews to ensure that legislation is not deterring progress and innovation in financial services.

ASIC has established a digital advisory committee and an innovation team who will focus in reviewing fintech solutions and concepts and will also assist startups in understanding licencing requirements, which seems as a step in the right direction.

Critical considerations in ASIC’s assessment to provide assistance:

  • Well-developed business model

  • Rationale for business innovation - Why is your concept innovative?

  • Potential to bring benefits to consumers

  • Level of understanding of the regulatory hurdles and requirements

ASIC’s stand and views on tech developments:

Robo Advice: A Robo Advice review team has been set up by ASIC that will be monitoring initiatives and defining licencing and obligations requirements.

Crypto currencies: ASIC regarded crypto currencies not to be financial products but acknowledged that the blockchain technology has potential to be fully disruptive. The accountability of each party would need to be defined clearly going forward.

Equity Crowdfunding: Consideration and attention is being given to the legislation frameworks that must be reviewed and assessed to ensure this concepts do not pose risk to end users. Given that the review is still under way they advised potential participants to reserve themselves from running with certain initiatives until there is more clarity on the requirements and obligations around platform and service providers.

Financial Services licencing: While different degrees of compliance would be required based on the business concept the regulatory layers will be applied based on personal, general advice and factual information, as well as the sophistication of the target audience.

The Opportunities

In my view technology has opened the door for a re-imagination of financial services. It now enables creative entrepreneurs to come up with solutions and services that can translate into cost and time savings for consumers. It also enables the dissemination of financial services into markets and segments that in the past did not have access due to size or scale.

Technology and big data gives entrepreneurs the opportunity to better understand global issues and global needs enabling Australia to add value internationally and at the same time capitalise from identifying and developing solutions that can add value globally.

The Risks of not providing support at equivalent international levels

Lack of support towards entrepreneurial activity and innovation at equivalent international levels can entice entrepreneurs to seek support and assistance through other programs or countries outside Australia,

Not encouraging and supporting an innovative mindset in order to remain at the forefront of innovation reduces opportunities to capitalise globally as a first market mover.

The Challenges

Starting a business is by all means very challenging and start-ups in financial services can be particularly challenging as there are licencing and compliance requirements that must be adhered to.

In addition to licencing requirements and costs which can take between 2 and 4 months to attain there are other pieces of legislation and other regulators to consider which can make the journey from start up to commercialization longer and expensive – a few to mention are APRA, Privacy, AML/CTF.

These additional considerations, time allocation and funding requirements can pose challenges to the development of fintech initiatives and in turn discourage innovation around financial services.

Efforts and cooperation are being sought by ASIC to aid fintech concepts access international markets if the concept is scalable or has global reach potential.

From a start-up view point ASIC could assist fin- tech start-ups with the following:

  • Reducing the licencing review time frames currently between 2 and 4 months

  • Provide guidance on the average time allocation required to comply and adhere with legislation from registration, licencing and ongoing requirements if pursued individually to allow for better business planning and management

  • Lead by example and keep incorporating modern technologies within their administration. It would be great if it was possible to register a business and make the registration payment by conducting an electronic transfer as opposed to having to submit a cheque at a bank branch. Simple efficiencies add up translating into time savings for new businesses and fintech start-ups

In summary

ASIC seems to be open to discuss and understand the challenges and needs faced by start-ups and entrepreneurs and has implemented a digital advisory committee and a team that will review fintech solutions.

The challenge is not just encouraging innovation but to provide support to enable fintech ideas to materialise into realities that can translate into cost and time savings for consumers not just locally but globally.

Lack of support to entrepreneurial activity and innovation at equivalent international levels can entice entrepreneurs to seek support and assistance through other programs or countries outside Australia, while lagging behind innovation reduces opportunities to add value globally and capitalise as first market movers and makers.

Both parties start-ups and ASIC will need to learn from each other on this journey to capitalise from creativity and capture local and global opportunities.

Share your thoughts @biznexstrategy @ASIC_connect #fintech or e-mail

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Strategic View Point by Carlos Mauleon Senior Manager of Strategic Business Initiatives at BIZNEX Consulting

BIZNEX Consulting - Strategic Roadmaps -

Your BIZNEX Partner.

#fintech #fintech #financialinnovation #roboadvice #crowdfunding #cryptocurrencies #startup

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