ACCC to monitor big banks buying Fintechs and blocking collaboration
Includes blockchain monopolization
Banks accused of paying lip service to Fintech collaboration
Cautious response from start-ups
Sources: Reuters; The Coin Telegraph; Australian FinTech; Smart Company
Summary: The ACCC is to monitor the big banks to ensure innovation is not closed down or blocked. Start-ups worry that a heavy handed approach may close down funding. Collaborative response from the banking sector may be the most appropriate.
Point of View
The Australian Competition and Consumer Commission (ACCC) told Reuters in an interview that the big four banks will be monitored to ensure they are not distorting the Australian Fintech market, by closing down innovation or blocking collaboration. This is a result of the big banks controlling 80% of the lending market, with a very stable market share.
The ACCC is not the only organisation to criticise banks’ role in collaboration with Fintech. Fintech hub Stone & Chalk is reported as saying that “banks remain reluctant to engage with the local fintech ecosystem” with start-ups finding easier sources of funding abroad.
The ACCC interview drew particular attention to blockchain. Blockchain or distributed ledger, technologies are still looking for their role in transactional systems, whilst banks and start-ups are experimenting, not just in Australia but across the world. Three of the big four banks are part of the global R3 consortium, whose initial focus seems to be the underlying technology platform and gaining a developer following.
The ACCC’s approach has generated a cautious response from start-ups. Unsurprisingly perhaps, startup owners are not keen to have an exit or source of funding blocked. Interviewed in StartupSmart, a startup founder suggested the ACCC should focus on regulating what happens after a corporate acquisition or investment, as the focus of the regulator should be on anti-competitive behaviour and fair treatment of suppliers.
ACCC’s intention to become involved in the activities of the big banks is part of the general trend to attempt to encourage a more competitive banking environment. Monitoring acquisitions is the latest sign of this trend. To be effective, it needs to be clear what behaviour the regulator wants to encourage or prevent. The reported statement highlighting blockchain’s potential for processing and settlement suggests a worry that banks may attempt to close down any competitive approach that looks promising.
Currently, evidence is scarce that blockchain technologies will lead to any improvement (in either cost or performance) over existing methods. A collaborative approach to industry communications, perhaps focusing on track record of innovation, would be a considered response.
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