Lessons for AfCFTA: FinTechs rejoice at 99% tax removal for UK and Australia

0
Uk And Aussie
UK and Australia

In December 2021, the UK and Australia signed a Free Trade Agreement (FTA) to facilitate bilateral trade and investment. The FTA agrees upon the removal of over 99% of tariffs between the UK and Australia and facilitates work and travel opportunities between both countries.

The agreement further covers digital trade, public procurement, and intellectual property amongst other provisions. Under the FTA, the extension of the working holiday arrangement by three years means that UK citizens under 35 will be able to travel and work in Australia with fewer obstacles. The UK Government expects to gain significant capital and economic growth from the agreement.

Speaking to Anastasia Nishnianidze, Austrade’s trade and investment commissioner to the UK and Ireland, and Stuart Keen, head of community at Fintech Australia, they discussed incoming benefits that will be brought about by the FTA.

Nishnianidze explains that her team supports Australian companies with their expansion into UK and Irish markets and helps them grow their business, facilitating engagements and forming connections on both sides.

Fintech Australia is a non-profit industry group that aids early-stage businesses in their growth, with over 400 members and 40 corporate partners. Keen works alongside Nishnianidze to bolster Australian fintech business opportunities in the UK.

Nishnianidze states that the FTA will eliminate roadblocks for Australian and UK businesses in the process of bringing over businesses from Australia. She further outlines the agreement as below:

The FTA will enable Australian businesses entering the UK to operate on equal footing with UK businesses. It also allows Australian businesses to access UK Government procurement contracts and promotes cooperation on regulatory matters that goes further than provisions under the existing Australia-UK Fintech Bridge, which will create a dialogue of legislation, and will create more ease of movement and mobility for talent between the two countries.

The mutual recognition of professional qualifications under the FTA will pave the way for professionals to work in each other’s countries, while new visa provisions will make intra-corporate transfers easier.

As an example, the new Innovation and Early Careers Skills Exchange Pilot offers a visa pathway for UK citizens who are early in their career, or who have a demonstrated innovation record, to work and live in Australia. If successful, this new pathway could be reciprocated by the UK Government.

Nishnianidze adds that the removal of localised data hosting requirements under the FTA is a game-changer, as “it will allow businesses to plan their growth knowing they can collect, process and transfer data between the two countries, without facing unnecessary red tape or costs. In general, the FTA creates excitement and energy for businesses to do more together.”

There are 16 UK fintechs currently in the pipeline to set up in Australia in the next six to twelve months, and about 42 UK fintechs have successfully been established in Australia since the establishment of the Australia-UK Fintech Bridge in 2018. Some of the fintechs which have established operations in Australia on the back of the Fintech Bridge include: GoCardless, Clearscore, Thought Machine, SumUp, Revolut, BUD, and Wise.

On the growth occurring in Australia’s fintech sector, Keen emphasises that there is a strong payments capability coming from Australia which has spurred the growth of Australia’s fintech sector in recent years. Stating that Australia is globally renowned as the founding nation of Buy Now Pay Later (BNPL), he says that the Australian payments sector has been dominating the global landscape in installed, alternative, and online payments.

Keen adds that players such as Monoova, Novatti, Ezypay, Karta, FlashFX and others have contributed to domestic growth of the payments sector by serving consumers and businesses towards the current state where over 98.9% of payments take place digitally, according to the Australian Banking Association (ABA).

When asked about a standout Australian company, Keen cited Karta gift cards, a digital gift card company that implements smart cards through Apple Pay solutions. They partnered with Paragon ID, a global leader in card manufacturing, to bring the first-ever digitally enabled physical Gift Card to market. Karta was established in 2021 via a strategic partnership with Mastercard and strategic investment from the Commonwealth Bank of Australia, and is on a mission to disrupt the gift card industry.

“The ABA reports that in-person branch visits in Australia have fallen by 46% between 2019 and 2022, so we are a digitally innovative population in terms of the way that we interact with our banks. Financial services are accessible to Australians via desktop or mobile applications. This results in rapid adoption when a new tech product is rolled out, so that is a really strong opportunity for growth for all kinds of digital technology businesses,” says Keen.

Remarking on trending topics in the Australian fintech ecosystem, Keen points to ESG and sustainability becoming more significant as a government priority. Fintechs such as Brighte, which helps consumers set up solar panels with 0% interest, and Greener, which empowers cashback solutions to use carbon offsets, place strong emphasis on making sustainability affordable and accessible for everyone. Greener also uses the Consumer Data Right (CDR), Australia’s open banking framework.

Expanding on the opportunities that Australia offers international fintechs, Keen highlights the high penetration of bank access among the digitally native population, which provides a high payments capability for card issuance and opens up avenues for growth for new businesses.

He continues that Australia is at Asia’s doorstep, and is open to engage in international trade and business. Thanks to the consistent rollout of new regulatory frameworks, incoming trade agreements and businesses coming into the country from the APAC region do not face many roadblocks or challenges.

Nishnianidze remarks: “Australia has a lot of openness to doing business internationally. We are quite a small country in terms of population and relatively far from the UK, so to really grow and engage we have always either traded internationally or worked hard to attract foreign direct investment. Australia very much welcomes international companies wanting to set up and help us innovate and grow.”

She claims that Australia is at the heart of the Asia Pacific region (APAC), making it easily accessible for APAC nations to collaborate due to the alignment of cultures and easily navigated regulatory processes. She explains that Australia has strong regulatory and business connections with Asian nations through a number of FTAs with the APAC region. Australia has just recently signed an agreement with India that will provide more opportunities for development for fintechs to operate on an international scale.

On what she predicts for the future of fintech, Nishnianidze states:

“I’m a big believer of fintech really going beyond traditional finance and looking at how it can impact every aspect of human life and operations. It can be applied in different areas. For example, companies are now looking at how they can help us navigate the cost-of-living crisis, and how finance can be made more accessible and inclusive to people around the world. When we are talking about ESG, those solutions are really going beyond traditional facets of financial services and that is something that I think we will see more of in Australia.”

She furthers that Australia is looking deeper into the expansion of the CDR, Australia’s open banking framework; it is already in use in the energy sector and will expand into other sectors such as non-bank lending

Nishnianidze explains that CDR effectively helps consumers turn data about their household spending behaviour into ways to save money, better manage finances and do business online more safely and conveniently. Nishnianidze continues that financial education has a crucial role to play in promoting financial inclusion and needs to be prioritised so that individuals can use innovative fintech tools and products to their highest potential. Financial management and education can change how fintech is used in everyday life.

The UK-Australia FTA opens up opportunities for fintechs in both countries to collaborate and expand, which will lead to more global development for fintechs. Looking to the future, we can expect more growth to blossom from this agreement.

Send your news stories to newsghana101@gmail.com Follow News Ghana on Google News

LEAVE A REPLY

Please enter your comment!
Please enter your name here