On 8 April, APRA warned that it would not issue any new licenses for at least six months, saying it did not consider it “prudent” to issue new licenses when the coronavirus outbreak is already making it more difficult to activity of established companies.
But the suspension was criticized by Australian fintechs.
“APRA’s decision to refuse to provide banking licenses [will] stifling innovation when it is needed most,” said Rebecca Schot-Guppy, Managing Director of FinTech Australia. “A delay of at least six months in obtaining a license could derail fintechs seeking this license and cost us jobs. They cannot afford to stand still for that long.”
Ms Schot-Guppy disagrees with APRA’s assumption that the outbreak will make it harder for new entrants to succeed, arguing that some of the “world’s biggest start-ups” – including Square, Slack and WhatsApp – were all founded during the GFC.
“Australia should instead welcome new entrants, give them the ability to compete and support fintech and large enterprise partnerships,” Ms Schot-Guppy said. “Many companies have accelerated their own digital transformations in response to COVID-19. Fintech partnerships play a key role in transforming existing financial services, but they can only do so within a supportive regulatory framework.
APRA made the decision not to issue new licenses due to a “fundamental change in the economic and social environment in Australia”.
“By allowing new entrants to access prudentially regulated segments of the financial system, APRA aims to achieve an appropriate balance between financial security and other considerations important to the community – efficiency, competition, contestability and competitive neutrality,” a APRA President Wayne Byres wrote in the press release. letter. “In doing so, APRA is also called upon to promote the stability of the financial system in Australia.”
“Experience has shown that it is difficult for new entrants to succeed, even under normal economic conditions, which is why APRA does not consider it prudent to license APRA-regulated entities at this time. »
