Fintech no threat yet to big banks: ACCC
The hopes are high that a wave of new fintech players will shake up the big banks and get a better outcome for customers. But we’re not seeing it yet, according to the competition watchdog.
“There’s been a lot of talk [about fintech] but not much really happening,” Rod Sims, the chairman of the Australian Competition and Consumer Commission, said at The Australian Financial Review Banking and Wealth Summit.
“Let’s hope something does … nothing is happening that is changing the playing field very much.”
The role of the ACCC in creating a more competitive landscape in banking has become a hot button issue.
A parliamentary inquiry into banking pointed to a regulator blind spot where competition in the banking sector is not adequately assessed.
Mr Sims said David Coleman, who led a parliamentary inquiry into banking, had “bashed up” the ACCC, scolding them for not doing enough to study competition in the banking sector.
But Mr Sims said the ACCC couldn’t conduct a review unless it was asked by the government. “We don’t have the money unless we are funded to do [a review] and only the government can enliven our information gathering powers.
“If they wanted to do it we would, but it’s their call.”
Mr Sims said that the regulatory burden in banking could have adverse impacts on fostering competition, as he made clear his desire to see the market share of the big four banks decline.
“It would be looking better if the market share of the four major banks wasn’t as high as it was … if we could see some financial innovation through fintech just actually making a difference and moving the dial in a way that makes a different.
“Thinking about how you prudentially regulate the four players versus how you apply rules to the other players is something that needs a fair bit of thought. Clearly you don’t need the same requirements on new entrants as you do the other players.”
Mr Sims repeated his concerns that there was not enough competition in the banking sector.
“When you see market share increasing, profits going up and there is not a lot of customer switching, the implication is its less competitive than other sectors.”
He dismissed the argument that there was a trade-off between financial system stability and competition.
“If we are preventing competition, we may enhance the position of the existing players and make the problem worse.”
The ACCC chair welcomed potential competition to the banks in the form of the large technology players such as Google and Apple that are encroaching on the banks’ turf.
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