A lack of innovation in the financial services industry is a bigger threat than a lack of stability, according to one industry expert.
Deloitte Access Economics Partner, Professor Ian Harper, argued that over-regulation, which prevents companies from innovating, was a bigger threat to Australia’s financial services industry than a perceived lack of stability.
“There’s a big gap between having absolutely no risk, having everything nailed down, and taking sensible risks. After all, that’s what the financial system is designed to do; we’re professional risk takers. So the bigger risk in my book is that we underplay that risk-taking, and we pay the price in economic development over the next 20 or 30 years.”
There’s a big gap between having absolutely no risk, having everything nailed down, and taking sensible risks
Mr Harper was speaking at a lunch hosted by the Financial Services Council (FSC) and Deloitte, which featured a panel discussion about the impending review into the financial services industry. He was joined on the panel by FSC CEO, John Brogden, who echoed the call for a less burdensome regulatory environment in order to stimulate growth.
“Our industry has struggled on innovation, broadly speaking for the last couple of years, because of the burden of compliance – the last few years have been about FoFA and Stronger Super,” Mr Brogden said.
He described the ‘Son of Wallis’ inquiry as a “once in a generation opportunity” to position the industry for future growth.
“I genuinely believe the terms of reference for this inquiry will not be written with an expectation of the outcome. I think it will be a very open and genuine inquiry – the Government won’t have all the answers in the bottom draw when they ask the questions.”
Mr Harper concluded by saying while he was keen to see the terms of reference for the inquiry, due to be released by Treasurer Joe Hockey in the next few weeks, he did not believe the review needed to be rushed.
“The system’s not broken,” Mr Harper said, “but we need a new blueprint to go forward.”
The lunch concluded with the presentation of the FSC/Deloitte Future Leaders Award. The Award is open to members of the financial services industry who are under 30 years of age. Entrants are required to submit a paper on one of four ‘hot topics’:
- Improving customer perception and experience
- Digital disruption in wealth management
- Longevity/ageing population
- Global markets
Bree McDonough, from Suncorp Life, was named the 2013 winner. Ms McDonough’s paper discussed the speed and impact of digital disruption on the wealth management industry, arguing the need to re-engineer business models around the connected customer.
“It’s critical that we continue to innovate and seek sustainable ways to grow our $2 trillion financial services industry,” commented Mr Brogden.
“The thinking and innovation from our next generation of leaders, combined with the experience and wisdom of our senior executives and mentors, are essential for the next stage of growth for financial services in Australia,” he added.
