Australia's financial regulators should display a 'bias to yes' when dealing with fintechs and the new and innovative business models they bring, an industry advisory group has said.
The recommendation is one of 15 made by the 'Australia as a financial and technology centre advisory group' (AFTCAG) report [pdf] - also known as the Low report - that aims to drive opportunites in the fintech sector.
The report calls on regulators to take a positive - rather than negative - approach to dealing with fintechs, in part by adopting a ‘bias to yes’ guiding principle when regulating financial technologies.
A 'bias to yes' - essentially an openness to the pursuit and approval of new ideas - has previously been credited as an essential part of what made Macquarie Group's business transformation under former CEO Nicholas Moore a success.
"The natural (and understandable) inclination of regulators is to err on the side of being over-cautious," the report states.
"It is important for a country trying to encourage dynamic and innovative activity in new parts of the technology sector that a clear 'bias to yes' and culture of quick decision-making is established as a counterweight to this tendency.
"A slow and cumbersome approach to regulation will result in companies (both local and foreign) avoiding Australia".
The report calls for regulators to be “forward-thinking and dynamic” to avoid stifling innovation and entrepreneurship.
Its regulatory targets include the Australian Securities and Investments Commission (ASIC), the Australian Prudential Regulation Authority (APRA) and the Australian Transaction Reports and Analysis Centre (AUSTRAC).
Speaking to iTnews, Liberal senator Andrew Bragg, who commissioned the report, said he wanted to see innovation enter the market easily and not be disadvantaged by red tape.
“We need to make sure that we balance [regulation and fintech] so that innovation is enabled and not held back," Bragg said.
“We want to make sure we get new ideas into the market. We don’t want to take forever to get new products into the market. That’s what this is trying to solve.”
The report found that as of 2020, there are over 800 active fintech companies in Australia, a significant increase from less than 100 in 2014 and 579 in 2017.