“We are on the right track in elevating the conversation around regtech but it has taken a little time and a pandemic to get there,” said Deborah Young, chief executive of the RegTech Association.
“We have monthly meetings with regulators in Australia and the UK, working with government to put regtech on Australia’s strategic road map, but also enabling government to see what’s in their own regtech backyard.”
Long development time
The association has plans to develop a digital marketplace based on Singapore’s APIX, to foster collaboration on developing solutions.
Adem Turgut, COO of SolveXia, said Australia could become a world-class player in the space, “however, we need regulators, entities and technology providers to innovate together, not just in their silos.
“Regulated entities also need encouragement to view regtech as innovation that not only improves their compliance posture but also helps generate greater insights from their data which they can turn into a competitive advantage,” he said.
APRA’s oversight of lending obligations – after the government said last month that it, rather than ASIC, should enforce standards – will increase focus by banks on automated processes to assess the position of borrowers. For example, Regional Australia Bank is using big bank data procured under the open banking regime to assess customer suitability for loans.
“While regtech can improve regulatory outcomes and reduce costs, it is not a substitute for regulatory reform,” the commission said. “Indeed, as regtech is intended to make the task of regulating easier, advances in technology heighten the onus on policymakers to ensure the need for, and design of, regulation are soundly based.”
The commission warned that even for low-tech applications, widespread implementation of regtech can take some years. “It can require substantial investment by regulators and businesses in capacity and cultural change while, as with technology solutions generally, enumeration of the scale and timing of the benefits can be difficult.”
An interim report of the Senate select committee on financial and regulatory technology, released in September and chaired by Andrew Bragg, found opportunities in regtech “span across the economy, and have the potential to be a significant export industry for Australia”. But the government needed to do more to encourage the sector to grow.
The committee called for government to “explore options to promote” using regtech solutions to help SMEs comply with their obligations under industrial awards. It also called for better processes in Commonwealth procurement to help start-ups tender for technology contracts, and for event-based challenges to enable innovative regtechs to solve policy and service delivery challenges.