As published on afr.com, Thursday 11 June, 2020.
The federal government is looking to use a new treaty with Singapore to increase exports of fintech services, following the new ‘‘open banking’’ regime.
The regime’s consumer data right policy could thus help facilitate cross-border data exchange to expand the digital economy.
The Department of Foreign Affairs and Trade said in March it had finalised negotiations of the Australia-Singapore Digital Economy Agreement, which is expected to become an additional chapter in the existing Singapore-Australia Free Trade Agreement.
It will reduce trade barriers and increase collaboration between businesses and government in Singapore and Australia by making it easier to move data between the two countries.
Senator Jane Hume, the Assistant Minister for Superannuation, Financial Services and Financial Technology, said she is exploring how an existing "fintech bridge" agreement with the UK might be extended to include Singapore, to help fintech start-ups take advantage of closer digital trade between the countries.
“Singapore is a valuable source of capital and skills for Australian firms," she told The Australian Financial Review.
"If we could build a 'bridge' to Singapore, and then expand that out via a trilateral bridge between Australia, Singapore and the UK – that is a really exciting opportunity."
Australia's "fintech bridge" with the UK was signed by Prime Minister Scott Morrison when he was Treasurer in March 2018 and is designed to help fintechs in each jurisdiction get licensed in the other, and facilitate closer collaboration between ASIC and the UK's Financial Conduct Authority.
Senator Hume said the government's consumer data rights policy, which will allow customers to take control of their data and move it around in a secure and regulated system and begins with open banking on July 1, could become an export driver.
Treasury is currently considering how to build upon the right, including creating common standards for managing customer consent, which will make it easier to build software.
“Because we are ahead of the game on CDR and data standards, that is an opportunity again," Senator Hume said. "If we can be ahead of the curve in setting data standards, it could be like the electrical socket: people will use Australia as the three-point-plug, as opposed to having to put a double adaptor on the top.
"That would put us at an extraordinary commercial advantage over other countries and that is what I am hoping for Australian fintech.”
The comments come after Australia and Singapore negotiated the Digital Economy Agreement to help create consistent regulatory frameworks between the two countries across a range of areas, including digital identities, transfer of data, e-invoicing, and shared ledger technologies to assure authenticity of trade documents such as certificates of origin.
ANZ Bank said in a submission to DFAT late last year it hoped the agreement would form part of "a reinvigorated Australian government trade digitisation strategy". It said the agreement could help Australian importers and exporters with customs processes and could advance work on a legal framework to support the acceptance of electronic documents used for bilateral trade.
Data Republic, which has built a governance platform to facilitate secure data exchange and works in Singapore, told DFAT closer collaboration around data could bring benefits to the commercial and residential property industry by helping move data between the countries to inform investment, improve expatriate lending processes, help the tracking of provenance of goods and materials, and allow the tourism and education sectors to better assess demand.
Senator Hume, who visited Singapore last November to address the Singapore Fintech Festival, said the government is encouraging UK and Singapore-based fintechs to enter the Australian market.
"I was impressed with how highly regarded Australian fintechs are (in Singapore) and how attractive we are as a fintech destination," she said. "We have similar demographics to a lot of Western Europe and north America so we are an ideal test bed for Asian fintechs that want to enter Western markets."
Australia can also learn from Singapore's coordinated regulation of the data economy under the Infocomm Media Development Authority.
FinTech Australia, in a submission to the Senate Select Committee on Financial and Regulatory Technology, said Australia should use IMDA as a model to "centralise data economy regulation and industry development under one dedicated government body".
Currently, aspects of Australia's data regulation is split between ASIC, APRA, AUSTRAC, the ACCC, Data 61, the Digital Transformation Agency, the Office of the Australian Information Commissioner (OAIC), and Home Affairs.
Data Republic, whose shareholders include Qantas, ANZ, NAB, Westpac, SingTel and Singapore Airlines, told DFAT that "data is the single biggest lever for micro-economic and social reform in the next two decades. Consequently, we see an opportunity for the emerging data economy to rapidly develop into the most material new sector of the economy across that period."
The text of the Digital Economy Agreement with Singapore is undergoing legal review before it is signed and then ratified as a treaty by each country.