Australia’s so-called “Big Four” banks will be closely monitored for any attempts to purchase Fintech or blockchain-based startups by the country’s competition regulator.
The Australian Competition and Consumer Commission (ACCC) will scrutinize any dealings or attempts by Australia’s biggest banks to swallow Fintech companies developing technologies like blockchain solutions in the financial sector, revealed the body’s chairman Rod Sims. As has been the predominant narrative for well over a year now, the Fintech revolution is seen as the banking industry’s biggest disruptive threat.
Australia’s “Big Four” – the Commonwealth Bank of Australia (CBA), Westpac, National Australia Bank (NAB) and Australia and New Zealand Banking Group (ANZ), have – so far – not faced meagre competition from the Fintech space. However, the areas of payments, remittance, foreign exchange and peer-to-peer lending, among others, could see significant disruption by technologies like blockchain. Case in point, three of the four biggest banks, sans ANZ, are a part of the R3 private banking blockchain consortium.
Speaking to Reuters about the Fintech space in a country where the “Big Four” control 80% of the lending market, purchasing new startups that could pose a threat is a very real possibility, Sims stated:
I think we need to, as an organization, take a really close look at these things. This means making a forward-looking judgement. Will these things [Fintech, blockchain] be disruptive in the future? They may be small now. What can they unlock in the future?
Sims further revealed that the ACCC, as a regulatory body, is keeping close tabs on developments in the blockchain industry. Globally, the financial industry is leading several others including healthcare, entertainment and several others in rushing towards exploring the potential for blockchain solutions for a streamlined, cost-saving infrastructural change of existing traditional systems.
Until recently however, there have been few efforts to standardize blockchain-based solutions. Incidentally, Australia is also leading an international technical committee as a part of the International Organization for Standardization (ISO) to develop blockchain standards globally.
Depending on the nature of blockchain cooperation in the future, Sims revealed that the big banks might have to seek ACCC permission first before taking part in blockchain projects.
The ACCC is also deliberating over a collective proposal by the Big Four banks demanding technology giant Apple allow access to its mobile payment platform, Apple Pay.
Addressing the standoff as a “very complex matter,” Sims noted:
You can look at it is in a sense someone challenging the banks. And you can look at it as the biggest company in the world keeping something exclusive to itself. We are working our way through that.
Cryptocurrency enthusiasts will remember the ACCC for opening an investigation against Australian banks’ shutting down of bitcoin companies’ bank accounts.
In 2015, Queensland Senator Matthey Canavan urged Sims and the ACCC to investigate the possibility of banks engaging in anti-competitive behavior after closing and denying banking services to bitcoin operators, without any formal explanation.
It represented a strikingly similar scenario, wherein banks were alleged to have colluded together against the threat of a competitor in the financial services industry. Senator Canavan said in a letter addressed to the ACCC chairman:
The actions by the banks would appear to directly engage competition in the financial services industry as it stands now – and, by effectively nipping in the bud the growth of potential competitors, is likely to substantially reduce the potential for future competition to the detriment of consumers in the future.
The action resulted in the ACCC investigating those Australian banks. Several months later, the banks were cleared of colluding against the closure of at least 17 bitcoin companies’ bank accounts.
Images from Shutterstock.
Last modified: June 26, 2020 2:04 PM UTC