Australian businesses could reap up to $16b in benefits from a thriving Australian fintech sector, ACS CEO Andrew Johnson told Senators on Thursday.
In an appearance before the Government’s Select Committee on Financial Technology and Regulatory Technology, Johnson called for improved startup incentives and greater investment in Australia’s human capital to boost Australia’s competitive position in the fintech and regtech fields.
“In ACS’ submission we highlighted research finding a $16 billion efficiency opportunity in Australian finance and insurance over the next 15 years,” Johnson said.
The ACS-commissioned research was undertaken by Harbour City Labs resident Faethm, a Software as a Service (SaaS) artificial intelligence platform delivering data, analytics and insights on the impact of emerging technologies.
The research methodology looks at the technology adoption and s-curves across seventeen technology categories.
“The global competitiveness of Australia’s current and future economy is being constrained by a growing imbalance between our investment in the Fourth Industrial Revolution compared to that of other nations,” Johnson continued.
“Australia’s artificial intelligence roadmap, developed recently by CSIRO’s Data61 for the Australian Government, highlighted that 14 of the world’s most advanced economies have announced over $86 billion in focused AI programs and activities over recent times. That is our competition.”
To boost fintech investment, ACS called for a voluntary accord with superannuation funds committing up to 0.5% of their funds’ allocations to Australian high growth tech startups along with the introduction of an early stage tech investment option where individuals could choose to allocate additional superannuation contributions to the sector.
“If we look at the Australian stock exchange today there are 21 technology or telco companies with market caps of over $1bn, making up over 6% of the total market capitalisation. It's very hard to see how people would achieve above average returns in their superannuation without a balanced investment in technology,” Johnson told the committee.
“So, this is more a signal to the marketplace to embrace the future.
“I think if there was an assessment done across the superannuation companies, and we figured out what their existing investments are, I don't think it would be a stretch target by any means.”
ACS also called for the Early Stage Innovation Companies (ESIC) tax concessions to be brought into line with the UK’s Seed Enterprise Investment Scheme, saying remodelling the local initiative would boost capital flows for the sector.
“It's important in a tight fiscal environment that we ensure more Australian capital stays in the country rather than going overseas," Johnson said.
“Capital is globally mobile, just like labour, and the economy will benefit.
“Our comparison between the UK and Australian scheme is that the UK schemes returns more than double.
“So, it would be very easy to be iterative to model ourselves on, and better, the UK system.”
In the submission, ACS also warned Australia was facing a retraining gap and urged the government to reskill the current workforce through the establishment of an Industry 4.0 Skills Fund offering micro-credentials in emerging technology areas such as artificial intelligence and data science.
ACS also called on the government to streamline the regulation of neobanks and modernise identification management rules to improve competition across the financial sector.
Committee Chair, Senator Andrew Bragg, thanked Johnson for the appearance, saying “ACS have delivered key information to our inquiry on the role of technology in creating jobs. Technology creates jobs!
“Our public hearings are almost complete and we are on track to deliver an interim report of ‘quick wins’ by the end of March,” concluded the Senator.