RegTech and compliance management
RegTech is composed of the words “regulatory” and “technology”. It is a collective term for the application of modern technologies, to get the increasing regulation in the banking- and financial sector under control both from an IT and a legal standpoint.
Attitude of the country towards RegTech-services
Given the strong governmental support and that the technology is already being utilised within the regulatory and compliance sectors, the climate towards RegTech in Australia can be considered as positive.
In 2018, ASIC received federal government funding to promote Australia as a world leader in developing and adopting RegTech solutions. This program has been used to develop several RegtTech initiatives including a Technology Assisted Guidance (Tag) Tool trial, a program that helps businesses deal with the credit and financial services licensing regulatory framework. ASIC recognises the potential in the technology and is committed to promoting and supporting its use within Australian businesses.
Further government support has been provided with the publication of an Information Paper promoting the potential use of regulatory technology in October 2020. This area of FinTech has the potential to significantly grow within the Australian market, given the strong political and social support.
Obligations and requirements to provide RegTech-services
RegTech is generally not subject to further regulations or legislative requirements. FinTechs which provide compliance and related regulatory services to other financial institutions do not need to be licenced. They are not required to hold an AFSL and are not subject to ACL and AML requirements
Additional comments regarding the legal situation for RegTech-services or what RegTech’s must be aware of in this business area
Market size for RegTech-services and biggest companies in this business area
In 2020, Australia was said to be the world's third largest RegTech hub behind the US and the UK. Australia has 80 RegTech hubs out of 600 globally and has grown by 15% since 2015. This has significantly outpaced the global growth of 6%.
Additional comments regarding the economic situation for RegTech-services or what RegTech’s must be aware of in this business area
Despite Australia’s share in the global RegTech, Australian RegTech companies have not attracted ongoing investment with Boston Consulting Group’s stating that investment in local RegTechs has declined by 50% since 2018, with only 1% of the global investments made to Australian RegTech companies.