Digital technology is breaking down barriers to competition in financial services, but it also threatens to create new monopolies and could undermine the integrity of the financial system, according to the report of the Commission of Inquiry interim Murray.
'' In some ways, technology and improve competition. It enables consumers to compare and switch between products, making new business models - such as online banks and only peer-to-peer lenders - a viable, said the interim report for the investigation of the financial system, which was released on Tuesday''.
'' However, it also has the potential of technology to reduce competition. Technology is the introduction of new economies of scale in the financial markets.''
He said that because of the technology business to obtain large amounts of data, for example, and this has become even more important to understand the risks and meeting the needs of the consumer. This means that with the rules and the wide range of customers have the ability to develop the best competitive advantages by'' to take advantage of pre-existing data sets of their own''.
The report pointed out several areas where regulation has not kept pace with technology, and suggested a new approach to deal with the speed at which the Internet and digital devices and convert this sector. They include the establishment of a subsidiary body of the government'' or'' mechanism that works with the private sector to monitor changes in the sector to ensure innovation and competition is to promote and maintain financial stability.
He added that'' various bodies, such as the Council of Financial Regulators and the Advisory Board for the financial sector is already monitoring the developments in the financial system''. '' However, while [they] consider the efficiency and effectiveness of the organization, they do not have certain states to look at innovation''.
It also said there was no single strategy comprehensive technology'' in place''.
'' Such a strategic look at issues including the requirements of electronic disclosures, and consumer protection, regulatory perimeter, and maintaining a flexible framework on the basis of the principles, update and implement the national strategy for cyber-security''.
Some developments, such as digital currency poses a threat to the safety of the financial system.
'' The report said that the safety of the money stored in the [payment providers unregulated] may be at risk in the event of a system crash or fraud, which may also occur in the third-party provider associated with the virtual currency''.