ACS identifies $16bn efficiency opportunity powered by fintechs

20 February 2019

ACS, the professional association for Australia’s ICT sector, today presented research of a potential $16bn efficiency opportunity powered by fintechs at the Senate Select Committee on Financial Technology and Regulatory Technology.

The ACS commissioned research was undertaken by Faethm, a Software as a Service 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.

ACS CEO Andrew Johnson said “continued investment in process automation technologies will yield the highest benefit for the Finance and Insurance industry, particularly over the next decade.  Process automation codifies pre-defined logical and rules-based tasks.  It is very complementary to regtech being another area of this inquiry”.

With the Australian economy ranked 93rd in terms of sophistication, and little diversity in Australia’s top 20 companies by market capitalisation with over 40% being in finance and insurance, ACS has highlighted a gap in upskilling and retraining of Australia’s existing workers as such, the professional association is urging the government to implement an action-oriented plan focusing on reskilling the current workforce. 

“In an environment where GDP has slowed and wages stagnated, 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. 

“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 AU$86 billion in focused AI programs and activities over recent times.  That is our competition,” concluded Mr Johnson.

In its submission, ACS provided responses and suggested action items against the Issue Paper’s five key factors including:

Capital and Funding

Here, ACS has encouraged two initiatives to incentivise Superannuation Funds, and send the right market signals, to embrace rather than fear the future:

●        The development of a voluntary accord with superannuation funds where accord signatories commit to allocating up to 0.5% of their funds under management to Australian high growth tech startups as a higher risk asset class.

●        Introduce an early stage tech investment initiative within superannuation where individual Australian citizens can allocate up to an additional 2% above the employer compulsory superannuation guarantee – that is removed from concessional contributions cap calculations. This will enable more individual Australians to participate in this higher risk, yet higher growth asset class, while also improving capital flow for early stage tech companies.

Tax

The 2019 ACS Australia’s Digital Pulse report includes a stylised scenario showing that the Seed Enterprise Investment Scheme (SEIS) in the UK investors generates double the return for investors compared to Australia’s Early Stage Innovation Companies (ESIC).

Remodelling ESIC to match and better the UK’s SEIS would be a low risk, easy to implement initiative that would help ignite capital flows for the high job growth engine room of the Australian economy.

Skills and Talent

ACS is advocating for the establishment of an Industry 4.0 Skills Fund where the delivery of micro-credentials could be rapidly deployed across the Australian workforce in emerging technology areas such as artificial intelligence and data science with an immediate lift in productivity and wages.

Culture

Open banking affords the ability for improved identity management.  If citizens undergone checks with one institution can easily share those details with another provider there is an immediate efficiency dividend.

The vision of Open Banking is to empower consumers, giving them control over their data, greater visibility of competitive products, and ease of mobility across products and providers in a safe and trusted way, and lowering costs through increased competition.

This is a big culture change where currently data is collected and protected, and there are real debates about who owns the date.

Regulation

ACS encourages the committee to consider a ‘Rules as Code’ strategy meaning all legislation and regulations are presented in machine readable formats from day one.

Central to a ‘Rules as Code’ strategy is standardization, optimising the efficient sharing of data ability with regulators lowering the cost of compliance monitoring through automation, real time access to data, and increasingly removing the vagueness of compliance and risk so that the playing field is more level.  It will also aid business adopt new regulatory frameworks faster while enabling regulators to respond to market conditions with great agility.

In this transition to greater real time data access, such standardization will further open up innovation possibilities for fintechs to see where gaps in the market exist and identify inefficiencies in supply chains.

To read the ACS’ full submission, visit: https://www.acs.org.au/insightsandpublications/public-policy-position.html

-ENDS-

Further information

Troy Steer

Director of Corporate Affairs and Public Policy

M – 0417 173 740

E – troy.steer@acs.org.au

About ACS

ACS is the professional association for Australia's technology sector. More than 45,000 ACS members work in business, education, government and the community. ACS exists to create the environment and provide the opportunities for members and partners to succeed.

The Society strives for technology professionals to be recognised as drivers of innovation in our society, relevant across all sectors, along with promoting the formulation of effective policies on technology and related matters. Visit www.acs.org.au for more information.