The Future Of Banking

11 March 2022

Address to the Australian Banking Association Conference 







A number of you in the business community have reached out to us in the Labor family following the passing of our colleague and friend, Kimberley Kitching – and that means a lot to us.

Kimberley spoke with a bravery and a clarity not common enough in our line of work. 

She was courageous when it came to human rights; compassionate on behalf of health workers; fierce and fun.

Our thoughts are with Kimberley’s loved ones, at a heartbreaking time.


Can I acknowledge the traditional owners, and thank Anna Bligh, Ticky Fullerton and the ABA for the invitation.

And all of you here for the chance to say a few words after contributions from Phil Lowe, the CEOs and regulators – and take some questions.

Before that, I want to convey my gratitude to you – for all the deferrals, fee waivers, restructuring and refunds you provided Australians and their small businesses – during the pandemic, the fires and now the floods.

And on a personal note, for the way the leaders of this industry have engaged with me directly, frequently, informally, generously, candidly.


It’s the perfect time to catch up again – about two weeks from a Budget, and about two months from an election.

When the recovery is underway but buffeted by rising inflation, falling real wages, and skill shortages – defining issues in our economy, made more challenging by natural disasters and global uncertainty.

Having spent this week in Sydney doing a number of investor briefings, boardroom discussions, consulting with CEOs from a range of industries, I know there is some anxiety about all of this.

What matters is how we respond.

When central banks raise interest rates and by how much.

How and when consumers respond to those inevitable rate rises, especially for many people without a buffer, but for others how they unleash hundreds of billions of dollars in accumulated savings.

How global markets react to rising energy prices and all the other economic consequences of war in Ukraine – recognising that inflation and wage stagnation hasn’t just appeared in the last fortnight.

For governments – how we rebuild after the floods, lock in the recovery, and lift the longer-term speed limits on the economy by investing more wisely in the drivers of productivity and the right kind of growth.

This demands near term and longer term thinking at the same time.


This challenge, this inflection point, perched between the big shocks of the past and big opportunities of the future, would be familiar to banks.

You’re moving from a period of change imposed by governments, following the necessary recommendations of the Banking Royal Commission.

From a period of uncertainty imposed by a virus and natural disasters and now an act of inexcusable Russian aggression.

To a period of change imposed by accelerating consumer preferences and changing technologies.

Having spent so much time with you, I know how much this is occupying your minds.

That’s why Stephen Jones and I have been so insistent in seeing the Royal Commission recommendations bedded down.

We know there’s been a great deal of regulatory change before, during and after Hayne, we want you to be able to digest it and move on.

We want to maximise confidence in the industry and move forward.


The future directions are clear.

Australians are big adapters and adopters, and we are moving away from cash at one of the fastest rates in the world.

RBA data shows cash is now just 32 per cent of in-person payments, much less than what we see in comparable countries.

The same is true of digital wallet transactions, which the CBA estimates increased by 90 per cent between March 2020 and March 2021.

Now more than 40 per cent of combined debit and credit card contactless transactions are via a digital wallet.

No wonder payments infrastructure is a primary focus for banks.

Apart from the New Payments Platform that was introduced in 2018, much of the regulatory architecture governing payments was created decades ago.

It predates the significant innovations in the sector like mobile payments or the New Payments Platform that I’ve just spoken about.

And it lacks coherent oversight to address the complexity of issues and the pace of frequent innovation in the sector.

Take for example, the growing role that technology companies are playing in the payments space.

Like you, we’ll be monitoring the findings of the ACCC’s investigation of ApplePay closely.

We know you’ve got concerns around Buy Now Pay Later. 

And I’ve told Anna we are happy to swap views on least-cost routing for payments.

Obviously, we need a comprehensive, long-term plan that considers these types of challenges for the future of regulation.

So that business can innovate and invest with certainty.

So that we can boost resilience.

So we can address the risks of enhanced financial crime.

And so we can maintain adequate competition in the sector.


Australians have also shown a willingness to embrace other financial technologies.

Recent survey data shows we’re one of the biggest adopters of cryptocurrencies on a per capita basis in the world.

Economists think of money as having three roles: a store of value; a unit of account; and a medium of exchange – and some are sceptical that crypto has proven itself in any of these areas yet.

But as global prices skyrocket, we may see even more investment in cryptocurrencies for a raft of reasons.

One is because their independence means they’re perceived – rightly or wrongly – as a hedge against inflation.

But before they can become mainstream, we will need to confront issues that arise from the emergence of digital currencies and the escalating role of big tech in our financial system.

By their nature, these developments make it difficult for regulators to have full visibility of all that’s going on in the sector and for all activity to be captured within the bounds of current regulation.

Just this week, President Biden signed an Executive Order calling for additional measures to address the risks, and harness the potential benefits, of digital assets.

The Order seeks to address a range of important issues for crypto growth including consumer protections, financial stability risk, financial crime, competition, accessibility of financial services, innovation and central bank digital currencies.

Here in Australia, we see two sets of challenges.

The first relates to consumer risk and preferences.

The RBA has warned that consumers with digital assets are increasingly open to cyber-attacks and IT malfunctions.

In a crisis, deposits held in these assets won’t be backed by a government guarantee in the same way that savings in a traditional Australian bank would.

We also know that certain forms of cryptocurrency are exceptionally volatile.

The second set of challenges are instability and volatility, and they go to the resilience and the knock-on effects for the system as a whole.

For governments, this means considering:

The limit of monetary and fiscal policy in a world where Australian dollar usage decreases.

The implications in a national crisis if foreign institutions aren’t incentivised to act in the national interest.

The tax treatment for foreign institutions that disadvantages domestic players.

The risks of increased financial crime because of digital asset anonymity.

And very relevant right now, the potential weakening of international diplomacy efforts, in a world where financial sanctions are becoming key levers in state disputes.

The US Treasury Department warned of this at the end of last year in a review of its sanctions program.

And those concerns may be playing out as we speak.

Bitcoin jumped over 10 per cent on 28 February after the US imposed sanctions on Russia.

The European Central Bank president Christine Lagarde and other EU senior officials were considering new measures just over a week ago to ensure digital assets are not being used to dodge EU sanctions.

And Russia has been developing its own central bank digital currency now for some time, which it revealed in October 2020 was at least in part designed to resist future sanctions.


Our aim for the system is to balance these risks and opportunities by:

Supporting the important role that established institutions play in providing stability and resilience in the system;

Fostering innovation and competition from new and emerging technologies and from thriving small businesses; and

Empowering regulators and facilitating regulation that is as agile as the sector itself. 

To do this, Labor will support or devise sensible measures that would protect consumers, ease pressures for small business, make the rules and regulations clear and support investment and innovation.

For example, making sure that payments regulation facilitates new and emerging systems being part of the regulatory structure.

Meaningfully progressing the conversation underway on a central bank digital currency.  

Giving consumers greater control over, and protection of, their data.

Several payment system reviews by the RBA and by Treasury have already been completed, and the final report of the Senate Committee into Australia as a Technology and Financial Centre has already been handed down last year.

Whoever wins the election will inherit all this thinking, and another round of consultations and considerations that are due to be handed down between the middle and the end of this year.

On the payments system – around additional powers for the Treasurer and the changes necessary to modernise payments legislation to accommodate new and emerging systems.

On crypto – around establishing a licensing framework for Digital Currency Exchanges, a custody and depository regime for crypto assets, a map of cryptocurrencies and tokens that exist already, and around Decentralised Autonomous Organisations.

And from the Board of Taxation on taxation of digital assets, from the Council of Financial Regulators on de-banking, and from Treasury and the RBA on the feasibility of a retail central bank digital currency.


A lot of this is complex and requires consultation by you, and with you – we recognise that.

Where we have plans we’ll identify them and be upfront with you and work through them with industry, in payments and otherwise.

We want to see instant transactions; lower transaction costs; stability; security; trust; and a level playing field for competition and change.

All that is vital to a more productive, more efficient, more competitive economy that works for more people – and that’s our objective.

We’d prefer to inherit some more developed thinking, but equally we don’t pretend it’s all easily fixed with a press release from opposition.

More appropriately, it’s a big agenda for us to tackle together if given the opportunity in a couple of months’ time.

I look forward to that and I look forward to your questions.