FinTech body seeks changes to APRA’s proposal to reduce market barriers to challenger banks
The Australian Government’s proposal to make it easier for digital-first challenger banks to compete against industry incumbents is could be improved, according to the peak body for fintech startups.
FinTech Australia has lodged a submission with the Australian Prudential Regulation Authority (APRA) in response to its discussion paper, entitled “A phased approach to authorising new entrants to the banking industry”.
The discussion paper proposes that new banking entrants, known as Authorised Deposit-taking Institutions (ADIs) can apply for a “restricted ADI licence”.
Under the restricted ADI licence, new banking entrants may take up to $2 million in deposits with an individual limit of $250,000 per depositor over a maximum period of two years, whilst maintaining a minimum of $3 million plus wind-down costs in reserve capital (or 20% of total assets, whichever is greater).
It is expected the restricted ADI licence-holder would remain within these limits while developing the full range of resources and capabilities necessary to graduate toward a fully-fledged bank licence.
In its submission, FinTech Australia welcomes the pathway, stating “it is our belief that many innovative new challengers will benefit from this new pathway, and from being able to successfully test their new services with consumers.”
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