Outgoing Australian Securities and Investments Commission (ASIC) chair Joe Longo will use his final public appearance to issue a dire warning that Australia risks a “lost generation” if it does not embrace innovation in technology and startups. Speaking at a Tech Council of Australia event on Thursday, Longo will emphasise that the nation is in a global innovation race and must act now to secure future prosperity.
Global Innovation Race
“We are in a global innovation race,” Longo will tell the audience. “If we do not embrace new market technologies now, we could be poorer for it as a nation in the future. We may well end up with a lost generation of Australians, consigned to a poorer standard of living because we did not act upon these opportunities.”
AI in Financial Services
New research conducted by the Digital Finance Cooperative Research Centre for ASIC reveals how financial innovations are evolving globally, with artificial intelligence becoming embedded in everyday financial operations. For instance, AI-driven claims processing and underwriting are expected to become widespread in insurance within the next five years.
Longo pointed to US insurtech company Lemonade, which uses machine-learning models to automatically process claims in under three seconds. “In Australia, there has been a surge in complaints about motor vehicle insurance due to claims handling delays,” he said. “Imagine how such technology could improve claims handling times following the next hailstorm — with the appropriate safeguards, of course.”
Portfolio Management Innovation
Portfolio management is another area ripe for innovation. Research shows the number of financial advisers has nearly halved since 2018, while demand for advice has surged. Longo noted that maintaining current advice coverage would require adviser numbers to more than double by 2055. “But we know many more people would benefit from advice if they could access it in a cost-effective way,” he said, referencing Betterment, a robo-advisory platform that provides automated advice at a fraction of the cost of traditional advice.
Australia's Strengths and Gaps
While the report highlighted Australia’s technical successes, from Wi-Fi to the cochlear implant, and its world-class payments infrastructure and pioneering buy now pay later sector, Longo said a single stand-out could not build an economy. “That means we need fresh thinking and innovative ideas from all market participants. However, recent experience tells us that some market participants are scared to try something new,” he said.
“While Australia is a leader now in terms of buy-now-pay-later regulation and real-time payments infrastructure, we lag in other areas — a gap that will only widen if we don’t act. And other nations stand poised to reap the benefits.”
Platform-Based Services and Accountability
The report found that financial services are increasingly delivered through platforms rather than directly by licensed institutions. This creates accountability gaps when responsibility is split across the platform, the product provider, and other service partners. Many institutions are also increasingly dependent on a small number of critical infrastructure providers, including cloud services, digital wallet operators, and compliance technology vendors.
“Disruptions at a small number of providers could affect a large part of the financial system simultaneously,” the report found. This underscores the need for good regulation, Longo said. “Technology is moving faster than any of us can comprehend, and if we miss the boat, there is a real risk that we will fall behind. Our research clearly shows that good regulation — regulation that focuses less on a prescriptive approach to specific technologies and more on key principles of accountability and oversight — can support innovation.”
