FinTech Regulation 101
Joint Regulator Info Session
Mark Adams
Senior Executive Leader, Strategic Intelligence and
Co-ordinator, Innovation Hub
Tony Richards
Head of Payments Policy, RBA
Neil Grummit
General Manager, Credit and Operational Risk Services
Bradley Brown
Acting National Manager, Strategic Intelligence & Policy
Este Darin-Cooper
Director, Regulation and Strategy
Outline of today
• Five short presentations
– Our agency’s role
– Our agency’s interest
– How we can assist fintech
– Any matters to highlight
• Questions & Answers panel
Fintech: Some numbers – US$ estimates
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$20B global investment
$300M Australian investment
$77B US alternative finance
$4.5B UK alternative finance
$350M Australian alternative finance
$19B assets under roboadvice in USA
$20B global savings for financial sector via
blockchain over next decade
Australia’s financial regulatory framework
Parliament
Government
Treasury
Regulators
Financial
system
regulation
responsibilities
Council of Financial Regulators
APRA
ASIC
RBA
ACCC
ATO
AUSTRAC
OAIC
Prudential
Financial
markets and
services
Financial
stability
Competition
Tax and SMSF
compliance
AML/CTF
Privacy
Sector data
collection
Source: FSI Interim Report 2014
Corporate
Governance
Payments
Resources
Culture
Current financial regulatory perimeters
RETAIL PAYMENT
SYSTEMS
REGULATION
CONDUCT REGULATION
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Market participants
Marketplace lenders
Managed investment schemes
Wholesale dealers, funds and advisers
Non-bank lenders
Financial advisers
Financial brokers and intermediaries
Custodians
Credit rating agencies
Retail FX dealers
 Non-cash
payment
facility issuers
PRUDENTIAL REGULATION  Purchase payment
facilities
 ADIs
 Retail payment systems
 Insurers
 Card schemes
 Superannuation funds
 Central clearing parties
 Credit rating agencies
OUTSIDE THE PERIMETER
 SMSFs
 Fund administrators
 Technology providers
Source: FSI Interim Report 2014
 Virtual currencies
By contrast: US financial regulatory framework
ASIC’s Innovation Hub
ASIC - Topics
• Innovationhub.asic.gov.au – for informal
assistance
• Digital advice consultation paper
• Marketplace lending information sheet
• FCA cooperation agreement
• Regulatory sandbox
Working draft graphic
Existing sandbox
framework
• Modular licensing
• Operate as a
representative
• ASIC discretion –
organisational
competency
• Informal assistance
• Power and policy
exists to grant
waivers and
no action letters
Tony Richards
Reserve Bank of Australia
Payments System Board Mandate
• Powers under the PSRA and PSNA are to be
used to
– control risk in the financial system
– promote efficiency in the payments system
– promote competition in the market for payment
services
• Powers under the Corporations Act are to be
used to
– contribute to overall stability of the financial
system
Neil Grummit
APRA
APRA – What do we do?
• Role
prudential supervision
=> entity financial & operational resilience
+ systemic stability
• Regulatory requirements much more onerous within the
prudential perimeter
• But prudential perimeter is small & defined by the ‘Industry
Acts’
banking
general insurance
life insurance
superannuation
private health insurance
APRA – & FinTech
• No idea how this will develop
=> principles-based, technology neutral approach
informed by consideration of materiality
• Many (most?) developments will fall outside prudential
perimeter, but will be employed by APRA regulated
entities?
• How can we help?
Engage on prudential framework (e.g. how to stay
outside!)
Exercise our various discretions where warranted
Bradley Brown
AUSTRAC
AUSTRAC’s vision and functions
A financial system free from criminal abuse.
• Australia’s Financial Intelligence Agency
– collect and disseminate actionable intelligence
– 45 domestic partners, 83 international partners
• Australia’s AML/CTF Regulator
– educate, supervise, enforce
– effective regulatory reform
Collaboration, innovation and inspiration
AML/CTF Act – key obligations
• A person that provides a designated service is a
reporting entity, and has obligations under the
Act to:
– enrol or register with AUSTRAC
– implement and maintain an AML/CTF program to
identify, assess and manage the risk of money
laundering and terrorism financing
– identify their customers and undertake ongoing
customer due diligence
– submit reports to AUSTRAC
– keep records.
Our interest in fintechs
Drivers of change
• Digital Transformation of the financial industry
• Proliferation of Non-Cash transactions
• More ‘customer-centric’ in product design and
delivery
Opportunities
• Exploiting technologies – distributed ledger /
digital identity / biometrics
Key messages
• Opportunities in public / private partnerships
• We are open to engagement
– influence design and embed regulatory safeguards
– co-discovery of potential applications
– consider applications for relief
• New approaches to regulation
Este Darin-Cooper
OAIC
Protecting information rights – advancing information policy
Overview
• Privacy – why you should care
• Risks of ignoring privacy
• Tips to minimise your risk profile
Why privacy?
• Good data handling practice drives
commercial success
• Build consumer trust
• Avoid reputational damage
The risks of ignoring privacy
• Damage to your reputation
 jeopardise funding / scaling / acquisition
• Need to redesign to retrofit privacy
 cost and delay
• Regulatory scrutiny
 increased compliance obligations
• Public sanctions
 damage to reputation / bottom line
Tips to minimise your risk profile
• Conduct privacy impact assessments (PIAs)
• Be open and transparent
• Collect and retain anonymised data where
possible
• Secure the data you hold
• Be prepared for a data breach
Questions & Answers Panel