A coalition of 32 financial technology startups, incubators, and investors has appealed to the Australian government to place more focus on reform in the financial technology sector. This will encourage startups to develop and help turn the country into a regional hub for innovation in this respect.
State Can Lose Billions in Tax Revenues
The organization claims that the country stands to lose billions of dollars in tax revenues, therefore calling for tax incentives and concessions for new companies active in the fintech industry, urging the government to dedicate a special task force to the matter.
Currently, the financial services industry accounts for some 18 percent of corporate tax revenues in Australia, according to the Sydney Morning Herald, which in money terms is around A$11.5 billion ($8.16 bln). International tech majors such as Google, PayPal, WeChat, and Facebook are eyeing the fintech sector in Australia (and not just there) and with a lack of local competition, they may well take a bite out of these revenues by providing services that local startups could also offer, but without paying their taxes Down Under.
The coalition will set up an industry association to lobby for its members’ interests
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To help the government, the coalition will set up an industry association that will lobby for its members’ interests. Among the most pressing issues needed to be addressed, according to the fintech representatives, including Stone & Chalk, a fintech hub involving people from 41 startups with the aim of helping Australia become a regional leader in fintech innovation, and Reinventures, an investment fund of Westpac.
Lack of Understanding
According to the coalition, the biggest problems that Australian fintech startups face, besides the lack of tax concessions on investments granted in other industries, include difficult access to credit data and lack of clarity regarding the status of digital currencies, but what it boils down to in effect is the absence of a coordinated effort to organize this sector.
Fintech industry representatives participating in the coalition said that encouraging the development of their industry should become a national priority, pointing out the disruptive potential of financial technology, which, by the way, is gradually being realized by all financial institutions, noting the example of the UK, the US, and Singapore, where government support for the financial technology industry has spurred its development benefiting the wider economy.
A recent study from Infosys and Efma found that a growing number of banks are turning to fintech as a way of gaining a competitive edge over digital tech startups unburdened by their complex structures and processes, which are eating into their market share globally.