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Fintech reforms to help new entrants compete with established banks

The Australian Government is working towards implementing measures that will foster innovation and competition in the fintech space, consistent with its statements in the 2017-18 Australian Government Federal Budget.

These include:

  • A phased approach to licensing: APRA proposes to introduce a new category of banking authorisation known as the Restricted ADI licence. Holders of a Restricted ADI licence will be permitted to conduct a limited range of banking business and will be subject to a more limited set of prudential obligations. The proposed restrictions include a limit on the maximum size of deposits from a single depositor of AUD 250,000 and an aggregate cap of AUD 2 million on all deposits. The period during which an entity may operate under a Restricted ADI licence is limited to two years.
  • Removal of restrictions on the use of the term 'bank': the government has proposed to allow all ADIs, including new entrants, to refer to themselves as a "bank". Previously, as a matter of APRA policy, only ADIs with at least AUD 50m in capital were permitted to refer to themselves as a bank. This change is designed to allow smaller ADIs to benefit from the reputational advantages of being called a "bank".
  • Open Banking Regime review: designed to provide customers with greater choice by giving them easier access to, and more control over, data relating to their finances and transactions held by their banks. One of the options that the Government is considering is a new right for consumers across the economy to direct data holders to transfer the consumer's data in a machine readable form to the consumer or a nominated third party. The significant amounts of data that a bank can hold about their customers can be a source of competitive advantage and creates "sticky" relationships with the customer. The Open Banking Regime is designed in part to ease some of these commercial barriers and allow new or smaller banks to compete more readily with the larger incumbents.

Further information

This case summary is part of the Allen & Overy Legal & Regulatory Risk Note, a quarterly publication. For more information please contact Karen Birch –, or tel +44 20 3088 3710.


Legal and Regulatory Risk Note