Despite fintech hype, Australia’s banks are lagging behind
Only one new banking licence has been granted to an Australian startup in the past decade.
Australia's banking sector has been put through its paces lately, with parliamentary inquiries into banking and small business lending practices. The probing has continued today with David Coleman, the chair of the House Economics Committee, lamenting the lack of startup competition in the Australian Financial Review.
This problem could go toward being fixed by making it easier to start a bank, he says.
"Recently I asked our Committee staff to find out how many new bank licenses had been granted to Australian start-ups in the past decade. The answer: one. Our startup banking sector is basically non-existent, and we need to change that."
His comments were echoed back in November by Tyro executive director Jost Stollman, the one fintech that managed to secure a banking licence in the past decade.
"We have a bank licence, but if anybody else here wants a bank licence, good luck," he said to the audience at Sydney's Fintech Summit.
Coleman went on to discuss the recommendations made by the parliamentary committee and the outcomes for consumers.
"We've made recommendations that the existing rules related to startup banking licences be amended, so that we can develop a similar culture to the UK, where a supportive regulatory environment has seen new banks flourish in recent years. More competition means better outcomes for customers."
Fintech Australia has thrown its support behind Coleman's comments, with CEO Danielle Szetho saying the time has come to reform Australia's banks.
"Australia’s fintech industry will not be able to grow and become internationally competitive unless there are less barriers for challengers to enter the banking sector and provide greater choice for consumers," she said.
"As the House Economics Committee has found, there has only been one new banking licence granted in the last decade - to Australia’s only digital challenger bank Tyro - which illustrates just how difficult the current process is."