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The Future of the Digital Economy

Tuesday 26 September 2017

 Recently, the Australian Government released the consultation paper, Digital Economy: Opening up the Conversation.

The paper’s purpose was to:
  • Enable and support the digital economy;
  • Build areas of competitive strength to drive productivity and raise digital business capability; and
  • Empower all Australians through digital skills and inclusion.

The digital strategy is expected to commence in the first half of 2018. According to the paper, “Australia’s performance in the digital economy has been mixed. As consumers, we are embracing technology. In the six months to June 2016, 91 per cent of adult Australians had accessed the internet. Data download volumes increased by 52 per cent between the June 2015 and June 2016 quarters to over 2.2 million terabytes.”

The paper went on to say Australia is now ranked 18th in the World Economic Forum’s Network Readiness Index.

However, the opportunity to be part of the global digital economy does not come without its risks.

From a GRC perspective, what is interesting is the Government’s approach to data sharing and their general approach to cyber security.

“Awareness and readiness of cyber threats is improving in Australia. While Australian companies are being hit with more malicious cyber activity, they are also putting in place better defences. In 2016, 59 per cent of organisations in Australia detected a business-interrupting security breach on at least a monthly basis, which is more than twice as often as 2015.”

The Australian Competition and Consumer Commission (ACCC) reported there has been $48.4 million lost in online scams.

It has also been reported that 69% of Australians are more concerned about their online privacy—though, conversely, three out of five Australians do not take the time to read privacy agreements.

In addition, the report referenced the Productivity Commissions’ report on data availability and use. From a financial services GRC perspective, that has sparked an interesting conversation about the use of open application programming interface APIs, and there is currently a consultation paper looking for feedback on open banking.

With the digital economy comes new potential risks—which means renewed focus on standards and regulations. The paper also mentions that outdated regulation will stifle regulation. Thus, it remains important for regulators to find that balance between protecting the market, while allowing it to grow.

“New businesses may find themselves operating in a regulatory grey area and new risks may not be anticipated by old legislation. For example, we need to consider the social and ethical implications of our regulations relating to emerging technologies, such as AI and autonomous systems.”

The paper also places emphasis on internationally-harmonised standards to ensure emerging fintech and other facilitative technologies in other sectors can operate on a global stage.

The Australian Securities and Investment Commission (ASIC) has already been taking a stab at this from the fintech and RegTech perspective.

ASIC has developed an Innovation Hub and a ‘regulatory sandbox’. The regulator has also signed numerous memorandums of understanding with a diverse range of international jurisdictions, as well as collaborating with domestic regulators and reaching out to the fintech and RegTech industries.

Click here to download the consultation paper.