FinTech opportunities to come from Australia’s Royal Commission

Australia is currently holding a Royal Commission into the banking sector and it’s fair to say that what has been uncovered so far has rocked both the public, the industry and policy makers alike.

The Royal Commission has uncovered a culture of big business not acting in the best interests of their customers, which appears to especially be the case for large institutions.

For example, AMP one of Australia’s largest financial institutions, deliberately mislead the regulator on several occasions and the Commonwealth Bank of Australia has had several issues including criminal offences and has paid more than 700 million dollars fine to the regulator over a number of breaches over the past few years.

One of Australia’s biggest dealer groups Dover that licenced several financial planners was essentially shut down overnight after failing to assist the Royal Commission, this left 100s of advisers without a licence and the regulator took the extraordinary step of telling clients that used a Dover financial planner to consider finding a new adviser.

All this means that more regulation is more coming to the Australian market which has left many pondering the profitability of the industry with increased compliance costs and regulation.

On the flip side, several FinTech players are developing applications that are aimed at helping reduce compliance risk on both the lending and financial planning side. Participants in the financial service space, even if they are trying to be a good corporate citizen, only must be non-compliant on one file and can still face significant fines and legal action.

The potential penalties are all waited on the side of the regulator and there is also no division of penalties based on the size of an organisation.

Several AI, machine learning and rules-based applications are being developed to try to minimise instances of non-compliance to ensure that best interest is maintained.

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Source: FinTech opportunities to come from Australia’s Royal Commission