ANZ Banking Group’s Chairman, David Gonski, states large-scale technology companies, such as Google and Facebook, will have to battle regulation, should they intend to compete with banks in Australia.
Gonski states companies such as Google will likely have a battle on their hands, stating high levels of bank regulation should deter them from entering the Australian market.
ANZ Chairman – David Gonski
Mr Gonski states of the possibility of such giants entering the Australian banking market, potentially leading to much lower returns:
“If I was sitting on the board of Alphabet which owns Google, or Facebook, the big decision I would have to make is: Do I want to remain unregulated except perhaps in relation to anti-trust or whatever, or do I want to get into the regime of regulation?”
“Regulation for banks involves equity levels, which can reduce massively the returns of a publisher, a company like Google. My guess is … there will always be a place for banks and they will not be competing in banking with the people like Google and Facebook”.
Thus far, both Google and Facebook have made strides into the payment marketplace. Google has rolled out Android Pay, enabling various banks to permit tap-and-go cardless use with mobile phone. Facebook has been granted an Australian patent to launch its peer-to-peer payment service embedded in Facebook Messenger.
At current, neither Facebook or Google conduct lending in Australia.
Commonwealth Bank of Australia CEO, Ian Narev, warns that large-cap tech companies will face strong opposition should they try and disrupt the marketplace, significantly more than other industries they have sought to disrupt:
“[Tech companies] will have a high degree of confidence in their ability to enter and compete successfully in new markets, they’re not going to find unaware traditional competitors unwilling to compete”.
Herbert Smith Freehills Global Co-Chair, Tony Damian, has also affirmed the notion that banks will offer a formidable fight:
“It’s not going to be a case of these hapless banks staring into the abyss of technology – banks have shown themselves to be very good and harnessing and utilising technology for their benefit”.
“We are certainly not going to see less regulation for banks. What we will see is regulation of the tech companies, the eye of regulation is looking everywhere and it is starting to look at those new entrants”.
Mr Damien also affirms that the financial technology sector would be heavily scrutinised over the next decade, whose catalyst may be a major failure of some nature:
“There will be a light bulb moment after something goes wrong when the government and regulators decide to catch up. That moment is not too far away”.
