In our last article, we talked about some general changes that the Government is making to the financial services industry. One of these changes –the introduction of crowd-sourced equity funding for proprietary companies–concerned financial technology (FinTech). Today we wanted to look at three further changes that are occurring in the FinTech space that you might utilise in your own business. Remember, however, implementing FinTech may involve risks for your particular business, so seek professional advice first.
(1) Trial a new FinTech product using the ‘regulatory sandbox’
Last year the Australian Securities & Investments Commission (ASIC) introduced a FinTech ‘regulatory sandbox’. In general, the law requires that a business get a financial services licence or credit licence from ASIC before releasing a new financial service or product. The sandbox loosens these rules for some FinTech services and products, such as financial advice and short-term payment systems. These services and products are now exempt from the licensing requirements, though they must inform ASIC before commencing testing and provide certain consumer protections. The Government announced on May 9 that the unlicensed testing period has been extended from 12 to 24 months.
There has never been a better time to either develop new FinTech, or use innovative new FinTech products to give your business the competitive edge
(2) Use ‘Bitcoin’ or another digital currency
Currently, businesses face a significant cost in using digital currency (such as ‘Bitcoin’). Using such currency means double payment of GST: The first time when you purchase the digital currency, and the second when you purchase something using that currency. From 1 July 2017, there will no longer be a requirement to pay GST on the purchase of digital currency.
(3) Empower your customers to use their financial data and purchase your service or product
One of the biggest growth areas in FinTech in recent years has been around the use and protection of customer financial data. With the right systems in place, customers can utilise their financial data to get a better deal on financial services, and businesses can use this data to be get the competitive edge in their customer offerings. Currently, customers have a limited ability to get their bank to release this data. On May 9, the Government announced that it will introduce open banking product and consumer reporting to give customers ownership of their data.
The Government has commissioned in an independent review to work out the best way to implement these data reporting reforms, with an aim to have a regime in place by the end of 2017.