ACS tells Senate inquiry there’s a $16 billion pot of gold for the financial sector if it embraces fintech AI

The fintech sector has the potential to deliver up to $16 billion in efficiencies to the financial industry via artificial intelligence, new research commissioned by the ACS reveals.

The IT sector professional body recently presented the research by AI analytics firm Faethm to a Senate Select Committee investigating fintech and regtech

ACS CEO Andrew Johnson told the senators that “continued investment in process automation technologies will yield the highest benefit for the Finance and Insurance industry, particularly over the next decade. Process automation codifies pre-defined logical and rules-based tasks. It is very complementary to regtech being another area of this inquiry”.

ACS  argues there is a gap in upskilling and retraining of Australia’s existing workforce as technology plays an increasingly important role in business and has urged the government to implement a plan focusing on reskilling workers.

“In an environment where GDP has slowed and wages stagnated, the global competitiveness of Australia’s current and future economy is being constrained by a growing imbalance between our investment in the Fourth Industrial Revolution compared to that of other nations,” Johnson said.

“Australia’s artificial intelligence roadmap, developed recently by CSIRO’s Data61 for the Australian Government, highlighted that 14 of the world’s most advanced economies have announced over AU$86 billion in focused AI programs and activities over recent times. That is our competition.”

The ACS submission to the senate committee offered responses and suggested actions for the five key factors in the issues paper released ahead of the inquiry.

They are:

Capital and Funding

ACS recommended two initiatives to incentivise superannuation funds to embrace rather than fear the future:

• The development of a voluntary accord with superannuation funds where accord signatories commit to allocating up to 0.5% of their funds under management to Australian high growth tech startups as a higher risk asset class.
• Introduce an early stage tech investment initiative within superannuation where individual Australian citizens can allocate up to an additional 2% above the employer compulsory superannuation guarantee – that is removed from concessional contributions cap calculations. This will enable more individual Australians to participate in this higher risk, yet higher growth asset class, while also improving capital flow for early stage tech companies.

Tax

The 2019 ACS Australia’s Digital Pulse report includes a stylised scenario showing that the Seed Enterprise Investment Scheme (SEIS) in the UK investors generates double the return for investors compared to Australia’s Early Stage Innovation Companies (ESIC).

Remodelling ESIC to match and better the UK’s SEIS would be a low risk, easy to implement initiative that would help ignite capital flows for the high job growth engine room of the Australian economy.

Skills and Talent

ACS advocates for the establishment of an Industry 4.0 Skills Fund where the delivery of micro-credentials could be rapidly deployed across the Australian workforce in emerging technology areas such as artificial intelligence and data science with an immediate lift in productivity and wages.

Culture

Open banking affords the ability for improved identity management, ACS says.  If citizens undergone checks with one institution can easily share those details with another provider there is an immediate efficiency dividend.

The vision of Open Banking is to empower consumers, giving them control over their data, greater visibility of competitive products, and ease of mobility across products and providers in a safe and trusted way, and lowering costs through increased competition.

This is a big culture change where currently data is collected and protected, and there are real debates about who owns the date.

Regulation

ACS wants the committee to consider a ‘Rules as Code’ strategy, meaning all legislation and regulations are presented in machine readable formats from day one.

Central to a ‘Rules as Code’ strategy is standardisation, optimising the efficient sharing of data ability with regulators lowering the cost of compliance monitoring through automation, real time access to data, and increasingly removing the vagueness of compliance and risk so that the playing field is more level.  It will also aid business adopt new regulatory frameworks faster while enabling regulators to respond to market conditions with great agility.

In this transition to greater real time data access, such standardization will further open up innovation possibilities for fintechs to see where gaps in the market exist and identify inefficiencies in supply chains.