Good morning and thank you for that introduction.
It's great to be here at the Asian Financial Forum here in Hong Kong. There is no doubt that Australia can learn much from our region's successes.
The Australian Government is committed to ensuring Australia is, and continues to be, a globally competitive marketplace.
Australia's financial services sector has been critical to Australia's strong economic growth, over many decades.
Our financial services industry is the largest sector in our economy, representing around nine per cent of GDP.
What's more, it plays a vital role in Australia's economic transition toward a stronger, more innovative economy.
Australia's financial expertise, resources and infrastructure – including our world class regulatory and prudential regimes – are well positioned for expansion into new markets in Asia.
Whether it is encouraging new services, ensuring better use of data or making it easier to do business across borders, innovation is transforming the Australian financial sector. I'm pleased to provide you with some examples that showcase the direction we are taking.
FinTech Regulatory Sandbox
In December 2016, Australia's corporate and financial services conduct regulator – the Australian Securities and Investment Commission (ASIC) – introduced a FinTech regulatory sandbox.
By allowing eligible businesses to test and refine innovative financial and credit services for up to 12 months without needing to apply for a licence, ASIC's sandbox reduces the time it takes to get these new services to market.
To build on this work, we are introducing legislation to broaden the scope of the sandbox to allow more businesses – including foreign companies registered in Australia – to test a wider range of new FinTech products and services.
Asia Region Funds Passport (ARFP)
Australia's funds management sector has over A$3 trillion under management, making it the sixth largest pool of funds globally and the largest in Asia.
By increasing trade in financial services across Asia, we have the potential to create a more competitive and efficient financial services sector, lowering costs and providing consumers with a greater choice of products.
There is no doubt that duplication and divergence in regulatory settings across different economies in our region is a significant impediment to cross-border provision of financial services.
Such regulatory burdens can make it unfeasible or impossible for fund managers to offer their services in other economies.
The Asia Region Funds Passport is an international initiative that will expand opportunities for trade in funds management.
And, it will also benefit investors, including consumers, through greater investment choice across a broader and more diverse funds offering.
The Passport will allow fund managers in participating economies to offer their services to consumers in any of the participating economies, without being required to comply with two different sets of regulation.
We want to encourage cooperation between regulators and to eliminate unnecessary duplication, whilst maintaining strong investor protection.
We are now in the final stage of implementing the Passport. All participants are well-advanced in their preparations and we are on track for commencement in the first half of this year.
Participating in a multilateral system of mutual recognition will make it simpler and cheaper to share products and expertise across the region.
We are also working with colleagues in our region to find other ways to increase trade in financial services through free trade agreements and mutual recognition arrangements.
To take advantage of the opportunities that flow from lower trade barriers in financial services, we must ensure we have a legal framework that international investors understand.
The Australian Government is re-drafting its financial laws to allow Australian Fund Managers to offer collective investment funds through a corporate structure, rather than a trust structure.
These structures will be known as Corporate Collective Investment Vehicles.
We acknowledge similar initiatives on foot here in Hong Kong, and also in Singapore, and we look forward to working with current and potential Passport participants to implement and grow the Passport initiative this year and beyond.
It has been estimated that assets under management in Asia will rise from US$12.1 trillion in 2016 to $29.6 trillion by 2050, representing a growth of 10.5% per year. This growth in funds will require consistent, competitive and efficient regulatory structures across our region to take advantage of the opportunities that come from it.
Open Banking
Australia is also empowering consumers by implementing Open Banking.
Open Banking will give customers the right to direct that their banking data be shared with eligible participants, such as FinTech firms and other banks.
This will allow customers to realise the value of their banking data and to obtain the banking and other financial products that best suit their circumstances.
Open Banking also encourages competition and innovation for the benefit of consumers.
We expect to see:
- competing providers striving to offer tailored and more competitively priced products
- comparator services that can identify which banking products and services best meet the customer's needs, and
- new tools to help customers better manage their finances.
The new services, products and skills prompted by Open Banking are likely to be in demand, not only in Australia but also overseas.
Thank you, I look forward to the discussion and catching up with you all.