ACCC welcomes fintech competition just not to the benefit of the Big Four’s pockets
Australian Competition and Consumer Commission (ACCC) chair Rod Sims has clarified remarks he recently made around financial technology startups (fintechs) being bought by members of the Big Four banks, telling a Senate committee it would be a shame if they were all acquired.
“We always find that when somebody’s either exiting or wanting capital, they can get a much better price from the biggest player,” Sims said on Thursday. “So there is a strong correlation between how much you get paid for being acquired and how much it’s anti-competitive … they benefit more from removing the competition, that’s why we’re always concerned about these issues.”
While he said the ACCC has no power to prohibit it happening as it’s a matter for the courts, he said there is an “extra layer of interest” the watchdog has in mergers or acquisitions by the top tier banks, verses the second tier.
“If you’ve got some really promising startups that seem to have momentum, seem to be offering innovation and benefiting consumers, I think you do have to be wary when they get taken out by the Big Four because that might smother the innovation, but more particularly from an incentive point of view, they might not want to cannibalise their existing customers,” he said.
Offering guidance to fintechs, Sims said “selling out to the biggest player” may not be the fastest way to get quick access to capital because there may be more hurdles to go through in terms of approvals by the watchdog.
“We think fintech, neobanks are just fantastic. We’re a competition regulator, a consumer regulator — we really want consumers to benefit and the whole digital world has opened up great prospects for competition. We want to make sure that competition and innovation is maximised,” Sims continued.
“We’re just overwhelmingly in support of the use of new technology innovation and I think in the banking sector, you can just see how it can bring benefits because you don’t need the personal interface, you can just do it digitally.”
To read more, please click on the link below…