The Assistant Governor of the Reserve Bank of Australia (RBA), Michele Bullock, delivered a speech at the Bund Fintech Summit in Shanghai on the developments in the retail payments industry and the potential implications these pose for regulators.
In particular, Ms Bullock pointed to the following as having the greatest impact in transforming the retail payments industry:
- advancements in technologies such as cloud computing, artificial intelligence and cryptography; and
- entrance of participants such as neobanks, fintech firms and global tech companies.
In order to limit barriers to entry for new participants while also maintaining a safe and efficient payment system, Ms Bullock stated that the RBA ‘sees a need to play a proactive role in facilitating cooperative projects and monitoring potential access issues.’ Ms Bullock pointed to the graduated approaches of ASIC sandboxes and the APRA’s Restricted ADI Licencing Regime as effective ways in which regulators can provide initial access to new entrants.
In response to the challenges posed by the development in new technologies, Ms Bullock highlighted the need for greater security standards and protections of consumer data as imperative to the effectiveness of the retail payment industry. It was stated that as with the developments in Open Banking, regulators may have to play a role in the adoption of minimum security standards in order to protect consumers from fraud.
Finally, Ms Bullock emphasised the need for retail payment systems to maintain higher standards of operational resilience similar to other high value payment systems. The proliferation of use by retail customers has underlined the importance of retail payment systems being able to provide their services without any form of systemic disruption going forward.
For a full copy of the speech, click here.