Australia regulator on lookout for big banks buying fintech startups

SYDNEY (Reuters) - Australia’s competition regulator will closely monitor any plans that involve the nation’s big banks buying up smaller financial technology rivals or striking blockchain cooperation deals, Australian Competition and Consumer Commission (ACCC) Chairman Rod Sims said on Monday.

Australian Competition and Consumer Commission (ACCC) Chairman Rod Sims speaks during an interview with Reuters in Sydney, Australia, October 31, 2016. REUTERS/Jason Reed

Sims told Reuters in an interview the ACCC had not yet examined any major deals involving Australia’s “Big Four” banks, which control 80 percent of the lending market, purchasing fintech start-ups. But he said any proposed transactions in that area would face scrutiny.

“I think we need to, as an organisation, take a really close look at these things,” Sims said. “This means making a forward-looking judgment.”

“Will these things be disruptive in the future?” Sims asked. “They may be small now. What can they unlock in the future?”

The Big Four - Commonwealth Bank of Australia (CBA) CBA.AX, Westpac WBC.AX, National Australia Bank (NAB) NAB.AX and Australia and New Zealand Banking Group (ANZ) ANZ.AX - have to date faced limited competition from fintech rivals in areas like foreign exchange, transaction processing and peer-to-peer lending.

Sims said the ACCC was also keeping an eye on developments in blockchain technology, which works as an internet-based transaction processing and settlement system that eliminates any need for third-party verification. Sims said depending on the nature of the cooperation on blockchain, the big banks might have to seek ACCC permission for such projects.

Three of the Big Four - CBA, Westpac and NAB - are part of the R3 consortium of global banks working on developing a decentralised online currency.

The same trio are also currently seeking authorisation to collectively negotiate with Apple Inc AAPLO> to install their own electronic payment applications on iPhones. Apple operates its own mobile payments app, called Apple Pay, in a number of countries including Australia. [nL3N1B01AK]

ANZ, which signed a deal to use the Apple Pay system in April, is the only one of the Big Four not to join the action.

Sims said the ACCC was expected to issue a draft determination in November.

“Apple Pay is a very complex matter,” he said.

“You can look at it is in a sense someone challenging the banks. And you can look at it as the biggest company in the world keeping something exclusive to itself,” he said. “We are working our way through that.”

Reporting by Jamie Freed; Editing by Kenneth Maxwell