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High privacy stifling Australian data innovation

With a “reasonably mature” regulation landscape, fintechs can find the Australian environment a challenging one, according to a local managing partner. 

user iconGrace Ormsby 08 August 2018 Big Law
High privacy stifling Australian data innovation
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Speaking about innovation, regulation and growth at the recent Baker McKenzie Asia-Pacific Technology Conference, Reinventure’s co-founder and managing partner Simon Cant said moving fast and in an open way without barriers to regulation will foster innovation.

“There’s no doubt that what we are seeing is that high privacy environments tend to at some level, stifle innovation,” he said.

He hinted that this could be an issue as Australia stares into “a data future,” with data expected to be the largest trading commodity by 2030.

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“There’ll be more data traded than just about any other commodity,” he stated.

In suggesting that regulation can be a problem, Mr Cant said the “notion of open privacy and low regulation does definitely enable innovation.” His personal view is that this is what has enabled “innovation on steroids” in China.

One of the challenges for Australia is that “reasonably mature regulation can really make it difficult for fintechs,” Mr Cant added.

“It gets worse actually because if it doesn’t change quickly, fintech then build to that regulation and then they become the new incumbents and they use it as a barrier of entry for the next fintechs.”

The example he gave was robo advisers building out technology for statements of advice, which he criticised as being “totally archaic” in a digital world where clients expect to be prompted by technology every time something different should be done with their finance.

While that’s what people expect, it’s not what the regulation has been built for, Mr Cant said, and “all the robo advisers have now built for that old world and now they’re resisting change to a new kind of approach to statements of advice, because that’s their barrier of entry for the next fintechs.”

It’s become a “big opportunity for regulatory arbitrage,” as a result, he noted, adding this has already been seen in cryptocurrency and is now occurring with data.

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