Its ideas on how superannuation funds should be regulated are also attached comments. If implemented, the report’s recommendations would amount to the greatest shakeup in Australia’s financial system since the banks were partially deregulated in the 1980s. Commentator Alan Kohler goes so far as to say that Murray has “gone rogue,” so far-reaching are his thoughts.
A whole chapter of the report, which can be downloaded in full or in pieces here, is devoted to IT-driven innovation, and the need for more of it.
“Technology-driven innovation is transforming the financial system, as evidenced by the emergence of new business models and products, and substantial investment in areas such as mobile banking, cloud computing and payment services,” says the report.
“Although innovation has the potential to deliver significant efficiency benefits and improve system outcomes, it also brings risks. Consumers, businesses and government can be adversely affected by new developments, which may also challenge regulatory frameworks and regulators’ ability to respond.”
Australia’s Big Four banks are –along with Telstra – the country’s largest private users of IT.. Each of them runs massive networks of data centres and communications systems that power their ATM, Internet, mobile banking and back office systems.
Inquiry head David Murray was head of the Commonwealth Bank between 1992 and 2005, its period of greatest technological implementation. He saw first-hand how the waves of technology – especially the Internet – transformed the banking sector,
His report says the innovative potential of Australia’s financial system and broader economy “can be supported by taking action to ensure policy settings facilitate future innovation that benefits consumers, businesses and government.”
It makes a number of recommendations of direct relevance to the IT industry:
- Encourage industry and government to work together to identify innovation opportunities and emerging network benefits where government may need to facilitate industry coordination and action.
- Strengthen Australia’s digital identity framework through the development of a national strategy for a federated-style model of trusted digital identities.
- Remove unnecessary regulatory impediments to innovation, particularly in the payments system and in fundraising for small businesses.
- Enable the development of data-driven business models through holding a Productivity Commission Inquiry into the costs and benefits of increasing access to and improving the use of private and public sector data.
“These recommendations will contribute to developing a dynamic, competitive, growth-oriented and forward-looking financial system for Australia,” Murray’s report says. It talks of removing regulatory impediments to regulation, and the need for government and regulators to support data-driven business models.
“As increasing amounts of data are collected and more sophisticated analytical techniques emerge, data can be used to develop alternative business models, products and services that improve consumer outcomes and system efficiency.
“These innovations can be facilitated by increasing access to de-identified and aggregated public sector data, improving consumers’ access to their personal information, and enabling access to private sector data where this does not reduce incentives to collect the data.
“These processes could be aided by developing standards for accessing and formatting data, including product information, and addressing consumer privacy concerns to strengthen confidence and trust in the use of data. The Inquiry recommends Government commission the Productivity Commission to hold an inquiry into the costs and benefits of increasing access to and improving the use of data, subject to privacy considerations.”
The Government is now considering the report’s recommendations. Do not expect quick action, nor anything controversial. Political – not financial – capital is the commodity most in short supply in Canberra at the moment.