Australian government agencies may strictly review the blockchain activities of the country's four major banks to prevent industry monopoly

Rod Sims, chairman of the Australian Competition and Consumer Commission (ACCC), said any plans by the country's four major banks to acquire fintech or blockchain startups would be subject to detailed scrutiny by the organization. Over the past year or so, fintech reform has been at the center of discussion and has also posed a disruptive threat to the banking industry.

The status of Australia's four largest banks - Commonwealth Bank of Australia (CBA), Westpac Banking Corporation (Westpac), National Australia Bank (NAB) and Australia and New Zealand Banking Corporation (ANZ) - has not been shaken. However, in the fields of payment, remittance, foreign exchange and P2P lending, financial technologies such as blockchain have already penetrated deeply. Among the four major banks, except for ANZ, the other three are members of the R3 banking blockchain alliance.

Sims told Reuters that in Australia's fintech sector, the four major banks control 80% of the lending market, and their acquisition of start-ups is likely to pose a threat to the market:

As a (government) organization, I think we need to have a comprehensive consideration. In other words, we need to be forward-thinking. In the future, will these technologies (fintech and blockchain) be disruptive? It may not be clear now. But what can they bring us in the future?

Focus on blockchain

Sims further stated that as a regulatory agency, the ACCC is closely following the development of the blockchain industry. He said that blockchain can simplify existing traditional systems and reduce the cost of structural adjustment. Globally, financial technology is at the forefront of exploring blockchain solutions, followed by industries such as medical care and entertainment.

Recently, the construction of blockchain standards has also been ongoing. Coincidentally, Australia has formed an international technical committee to create international standards for blockchain. Currently, the association has been approved by the International Organization for Standardization (ISO).

In the future, collaboration will be the main form of blockchain research. Therefore, Sims revealed that large banks must obtain approval from the ACCC before participating in blockchain projects.

The ACCC is currently dealing with a proposal from the four major banks to be included in Apple Pay, the mobile payments platform from tech giant Apple.

Striking that balance is a "very complex process," Sims said:

You can think of it as someone challenging the banks. You can also think of it as the banks trying to monopolize something. We want to disrupt that.

The origin of Bitcoin

Cryptocurrency enthusiasts may remember that after Australian banks closed the accounts of 17 Bitcoin companies, the ACCC immediately launched an investigation.

In 2015, Queensland senator Matthey Canavan wrote to Sims asking the ACCC to investigate whether the bank's refusal to provide services to Bitcoin operators was suspected of anti-competitive behavior.

The banks’ motives are clear: they have colluded to come up with a competitive threat to the financial services industry. Canavan wrote in the letter:

As it stands, the banks' actions appear to be a direct interference with competition in the financial services industry, as they seek to nip potential competitors in the bud, thereby greatly reducing the risk of a sharp drop in future customers.