ASIC looks to expand regtech initiatives

Corporate regulator ASIC is planning to tweak how it deals with fintech start-ups in order to keep up with developments in the rapidly changing sector.

ASIC last year set up a finance technology "sandbox" for start-ups to test their ideas without the need to acquire a financial services licence.

Now the regulator intends to set up a new liasion group for regulatory technology (regtech).

The regtech liasion group will comprise fintech and other technology companies, academics, consultancies and consumer bodies, as well as Australian regulators. Meetings of the group will take place every four months for networking and discussion of regtech developments and collaboration opportunities. 

A small number of regtech trials are also on the cards, along with a hackathon later this year.

ASIC is currently trialling a cognitive tool to analyse webpages set up by providers of self-managed superannuation fund services, and machine learning applications assessing document sets for evidence in investigations.

The regulator is also testing a social media monitoring tool and a mapping utility to visually identify connections between market entities.

ASIC defines regtech as the use of new technologies by the fintech sector to solve regulatory and compliance requirements more effectively and efficiently. 

Regtech could be artificial intelligence, natural language processing, data reporting, regulatory codification or big data analysis, ASIC said [pdf].

While new and innovative fintech business models can bring efficiency and cost benefits, they can also test the legal boundaries of regulation and approaches to delivering good outcomes for financial consumers, ASIC said.

For that reason, such business models need to be carefully considered to see how they fit into Australia's regulatory framework.

ASIC has also expanded the scope of is Innovation Hub, set up in 2015, to include engagement with the regtech sector.

The hub aims to provide a balance between fintech innovation and the risk of poor consumer and market integrity outcomes. ASIC said the hub should promote the provision of fair financial services and markets in a digital environment.