I’ve been recently invited by Finsia to attend as their representative at the Inaugural National Fintech Cyber Security Summit.
This event is being held in Sydney on May 3rd and is aimed to help to accelerate the relationships and collaborations necessary to develop Australia’s innovative capability in fintech cyber security.
The Federal Government in March released a statement on its future innovation strategies and priorities. Implicit in this plan is the overarching goal of driving Australia, to become the FinTech Hub of Asia.
It is acknowledged that cyber security is an integral part of Financial Services and we want to grow our national capability in that regard.
This Summit has been designed to accelerate Australia’s fintech cyber security ecosystem.
We need to start this conversation by understanding the technological, cultural and mindset challenges.
Not surprisingly we look at Israel with envy and they have a thriving and profitable cyber security industry that nets an impressive US$4.5B per annum.
To duplicate this will take some doing, but it is clear that many Australian Cyber Security startups, look to relocate to Silicon Valley as the struggle to find local support and funding.
Australia’s Fintech Priorities
The Federal Government has committed A$30 million to establish an industry-led Cyber Security Growth Centre. This initiative is designed to both expand and strengthen Australia’s cyber security industry.
To me there is a clear nexus between a strong cyber security to enable the move from Analogue into a Digital world.
Each and every enterprise has to have confidence in their cyber security, otherwise this creates unacceptable risk for their operations.
It is expected that the “proposed Cyber Security Growth Centre will facilitate improved engagement between research and business, improved access to global supply chains and international markets, improved management and workforce skills, and regulatory reform”.
With a global cyber security market estimated to be US$71 billion, this is an attractive market proposition to be engaged with and the logic is indisputable.
But how does this fit in with our parallel push into China?
Impact of China (ChAFTA)
China is already Australia’s number‑one for both export market and imports supplier. The Australian Treasury notes that:
“China is already Australia’s largest services market, with exports in services valued at $8.8 billion in 2014–15. China’s share of Australia’s service exports has increased from around three per cent in 2000–01 to around 14 per cent in 2014–15.”
Building upon this foundation we have a unique window with the China–Australia Free Trade Agreement (ChAFTA), that came into effect from 20 December 2015.
What this means is that Australian Financial Services and Startups have an ability to have products launched into that market
We want to be able to have our Fintech startups launch into China and make inroads into what is shaping to be a massive sector. Just for a flavour, bite on this factoid
“China’s e-commerce industry is worth about $672 billion and is expected to more than double to $1.6 trillion by 2018, accounting for more than half of global e-commerce, according to Citigroup’s report.
China’s peer-to-peer lending business last year of $67 billion was more than four times bigger than the U.S. market, Citigroup said”
It’s already huge and growing bigger. It makes sense that we want to get a slice of this pie. But……
Cyber Security Quandary
Here is the tricky part. Israel has built an enviable cyber security industry on the back of their Israeli Army and from the ongoing daily practical experience in defending themselves.
We have to start to integrate how the Australian Army works with industry and it would be great to see the same setup that ex Special Forces Cyber Security specialists also launch startups here in Australia.
That’s where it becomes really problematic. It is often the case that cyber security encryption or technology have US Defence heritage.
I’ve seen some great examples of video facial recognition analytics that would be ideal to sell into China. But I suspect that some of the technology that underpins this may be sensitive or indeed forbidden to be sold into China.
The upcoming National Cyber Security Summit, will discuss how to position Australia as a regional hub for fintech cyber security collaboration and innovation.
It is a real quandary and we have to find a way to address this with our number 1 trading partner.
We have to work out if we are friends or frenemies?
The comments expressed in this article are my personal opinions and do not represent Finsia
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