Government regulation of Australia’s financial services sector has greater power to disrupt the industry than digital innovation, according to one expert.
Don Sharp, who is executive chairman of Integrated Payment Technologies (InPayTech) and Managed Accounts Holdings, and co-founded advice group Bridges Financial Services, said the greatest innovations over several decades have not come from within the financial services industry, but from the federal government.
“Ours is a reactive industry, prone to the continual winds of political and policy change from Canberra,” Mr Sharp said.
“Against this constant legislative and regulatory buffering, it remains challenging for the industry to properly invest and develop true innovation that drives stable, long-term positive change for the end consumer and the economy.”
Mr Sharp praised the level of effort being mounted by the fintech sector and the assistance of the corporate regulator ASIC in providing ‘sandbox’ relief to start-up digital technologies.
“These are positive measures,” he said. “But my hesitation with endorsing most endeavours is in knowing what it takes from a financial and personal point of view to take a good idea, develop it into a business and then deliver a sustainable, long-term commercial proposition in a changing market.
“The task of building a successful business is challenging at the best of times, but add legislative change and it becomes almost impossible.
“Even today, having finalised the federal election result in Australia, we see lingering political uncertainty over the Coalition government’s superannuation taxation policy. Our industry is obligated to meet whatever shifts are made by government and fund a response to those shifts, whilst also minimising downside risk to the customer or fund member.”
[Related: A checklist for fintech success]