Covid-19 forcing the fast growth of the Australian regtech sector

Covid-19 forcing the fast growth of the Australian regtech sector

While the escalating costs of compliance and cyber security, new market entrants and a more stringent regulatory regime are forcing the Australian regtech sector to mature, the effect of Covid-19 has greatly increased the speed of change, according to a report released today by Ireland’s innovation agency Enterprise Ireland, the world’s most active fintech investor.

The report, entitled The State of Regtech in APAC, provides the most comprehensive, independent analysis available on the adoption of regtech across the 10 key APAC markets of Australia, Mainland China, Hong Kong, Indonesia, Japan, Malaysia, Philippines, Singapore, Thailand, and Vietnam: identifying the specific opportunities and roadblocks facing regtech players in each country.

Deborah Young, CEO at The RegTech Association welcomed the Report launched in Australia today, stating, “We welcome this much-needed whitepaper from Enterprise Ireland which is essential reading for any regtech company operating or expanding in the region and they key policy makers in each country,” she said. With multiple markets of different maturity levels, it is great to see all the regulations and key challenges pulled together into one comprehensive report. We are delighted to make it available to our members and thank Enterprise Ireland for all the work and time they have invested in creating this overview”.

“The State of RegTech in APAC Report comes at a very timely manner considering the substantial changes emerging technologies bring across a suite of industries and business sectors and the pressure for reconceptualising the decontextualising the role and nature of regulation”, said Dr Dimtrios Salampasis, Director and FinTech Leader at Swinburne University of Technology. “The demand for innovation and redefinition of regulatory narratives are paving the way towards the emergence of new and novel business models leveraging and capitalising on the fusion of technological, business, societal, cultural and ethical underpinnings. Digital law and regulatory reforms remain at the forefront of disruptive innovation in the quest of addressing complex, multifaceted and integrative challenges. The outcomes and insights provided by the report will pave the way for further experimentation, inform key decision-making and promote regulatory-driven technological entrepreneurship and innovation”, he added.

“While the Australian government’s significant investment in modernising businesses large and small and increasing fintech trade in the 20/21 federal budget was welcomed, Covid-19 has been the huge accelerant for the sector”, explained Scott Patterson, Enterprise Ireland’s APAC Fintech and Financial Services Lead, who is based in Melbourne.

“The pandemic has forced many financial services organisations to fast-track their digital transformation. This allows them to provide better digital banking services and to move away from legacy systems to cloud-based regtech platforms that are flexible enough to meet the current expectations of local regulatory frameworks, while also future-proofing against the ever-evolving regulatory landscape. This is set to grow across many ancillary sectors under the new Consumer Data Right regime.

“This unique report is a compendium for anyone in the regulatory, risk or compliance functions of any company in the region, as well as for regtechs looking to scale and expand, particularly Australian regtechs who have outgrown the local market,” added Patterson. “It’s an objective deep-dive assessment of key markets to help people understand the regulatory landscapes, market conditions, government initiatives, ecosystems and critical players in each market.” 

Key Australian highlights

Some highlights from the report’s Australian overview include:

  • Regulations Invite Innovation

The impact of the Royal Commission has heightened awareness around compliance and cultural issues and the rising cost of compliance is now starting to affect businesses, forcing them to look for alternative solutions. 

  • The Covid-19 Effect

Covid-19 closed many service branches across Australia, which will remain closed as consumers demand more complete digital services. As a result, the need to manage the risks of cybersecurity, digital identification services and KYC are escalated.

  • New Entrants Drive Change

New players entering the market with purely digital platforms and built-in regtech solutions are forcing incumbents to up their digital game to remain competitive. These regtech technologies have usually been tried and tested in more advanced and mature regulatory environments, so they are well positioned for changing markets in the region.

  • Time to Value Significantly Reduced

As awareness has grown, the average time to value, a measurement of time taken from the initial conversation with a potential buyer to full production deployment by the regtech provider, has reduced from two years to 13.3 months.

  • Australian Regtech Needs to Export

While momentum in Australia is positive, it is not happening fast enough for Australian regtechs to survive without export to third-party markets.

  • Expansion of the Regulatory Spotlight

As Open Banking and the Consumer Data Right regimes expand from banking to the superannuation, insurance, telecommunications, real estate and energy sectors, these areas will need regtech solutions to manage their increasing regulatory challenges.

The State of Regtech in APAC report is available to download at