Australia
risks producing a “lost generation” of citizens stuck with a lower
standard of living if the country fails to keep pace with global financial
innovation, ASIC Chairman Joe Longo said today (Thursday), as
the regulator published a landscape review mapping the country’s standing
against six major overseas jurisdictions.
The report,
prepared by the Digital Finance Cooperative Research Centre, covers the United
States, the United Kingdom, the European Union, Singapore, Hong Kong, Canada
and Switzerland.
It
concludes that AI is moving into routine financial operations worldwide, while
financial services are being embedded inside non-financial digital platforms.
“Backers, Not
Blockers” Is the New Stance
Longo used
a Tech Council of Australia event in Sydney to push his case. He told attendees
that Australia is “in a global innovation race” and that failing to
act could mean Australians “could be poorer for it as a nation in the
future.” He repeated his framing that he wants ASIC to be “backers,
not blockers” of financial innovation.
Industry
engagement on parts of the agenda has been thin. Longo said roughly half the
market declined to take part in or even meet with ASIC’s recent tokenization
survey, and only around a third provided detailed feedback.
The
pushback comes as ASIC ramps up enforcement, securing a record A$349.8 million
in civil penalties in the second half of 2025.
Australia Leads on BNPL
and Real-Time Payments
The DFCRC
analysis places Australia in its “advanced” category in two areas.
Domestic
buy-now-pay-later providers have been required to hold an Australian Credit License
since June 2025, placing the country ahead of the UK, where the Financial
Conduct Authority will only begin regulating BNPL from 15 July
2026, and alongside
the European Union.
Around
one-third of Australian adults have used instalment payment services, according
to Reserve Bank of Australia data.
The New
Payments Platform also drew favorable comparisons. More than 1.82 billion
real-time payments, including Osko and PayTo transactions, were processed
through the NPP in 2025.
Australian
startups raised more than A$5 billion in venture capital last year, the
country’s third-best year on record, and produced 1.22 unicorns per US$1
billion of VC invested since 2000, almost twice the US ratio.
Lemonade, Square and
Betterment Set the Global Pace
The gap
widens in insurance, SME credit and digital wealth, where the DFCRC found
Australia trailing the US, UK and Singapore.
Lemonade,
the US insurtech founded in 2015, automated roughly 55% of its claims fully
without human intervention as of December 2024, and 96% of first notices of
loss were handled by its claims bot, according to the company’s 2024 annual
filing cited in the report. Simple claims settle in under three seconds.
In SME
credit, Square Capital, now part of Block, had originated more than US$18
billion in cumulative working capital loans by mid-2025 based on merchant
transaction data, with Shopify Capital, Amazon Lending and PayPal Working
Capital running comparable models.
Betterment,
the US robo-advisory platform, held roughly US$65 billion in assets under
management by early 2025 and charges 0.25% annually, against the 1.0% to 1.5%
typically charged by human advisers.
Longo said
the technology could matter because Australian adviser numbers would need to
more than double by 2055 to maintain current coverage.
EU and Singapore Set
Different Templates for AI Governance
The
competitive context cuts across regulatory style as much as technology. The
European Union’s AI Act, which classifies insurance
pricing and credit risk assessment as high-risk applications, imposes documentation, testing and
human oversight obligations on lenders and insurers using algorithmic
underwriting.
The bloc’s
Digital Operational Resilience Act adds parallel rules on third-party tech
dependencies.
Singapore
has taken a different path through its Monetary Authority’s Fairness, Ethics,
Accountability and Transparency principles and the Veritas toolkit, which give
firms practical assessment tools without prescriptive legislation.
The European Central Bank has separately
warned about AI risk in finance, and Australian and New Zealand regulators have flagged AI-powered investment scams as a growing problem.
Open Finance and SupTech
Are the Next Battlegrounds
The DFCRC
identified four priorities for Australia: clearer guidance on how existing
obligations apply to AI-driven decisions, tighter oversight of financial
products sold inside non-financial digital journeys, expansion of the Consumer
Data Right beyond banking and continued investment in ASIC’s own SupTech
capacity.
The push
lands as Australia’s parliament has already
passed legislation
requiring crypto exchanges and custody platforms to hold an AFSL, with
penalties reaching up to 10% of turnover for non-compliance.
Longo said
ASIC will keep working with the Reserve Bank of Australia on a potential
digital financial market infrastructure sandbox. Further research on capital
market innovation and tokenization is due in June.
This article was written by Damian Chmiel at www.financemagnates.com.
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