Data61 wants Australia to go all-in on fintech and cybersecurity innovation

Data61 has published a guide on how Australia can leverage the cybersecurity and fintech talent present in the country's startup scene, highlighting in particular the need to combine the two sectors with the strong backing of both industry and government to advance Australia's global competitiveness.

In Startup Secrets: How Australia can create new businesses with fintech and cyber security industry collaboration, the country's peak innovation group says it is important to look at the intersection of fintech and cybersecurity to solve complex problems via collaboration, rather than by competing.

According to Australia's Special Adviser to the Prime Minister on Cyber Security Alastair MacGibbon, cybersecurity is the foundation of the country's information economy and similarly, MacGibbon believes Australia's financial services sector is world-leading in its robustness and adoption of emerging trends.

"Without world-class cybersecurity, trust in our ability to perform reliable financial transactions will erode, as will our confidence to develop new products and services for business and consumers," MacGibbon wrote in the report's foreword. "We are a nation of innovators, but too often our bright ideas are captured and commercialised by larger companies based overseas."

The cybersecurity veteran also suggests that it is in the nation's best interest for all facets of the economy to work together to develop an Australian-based industry, rather than continuing to consume imported ideas and technology -- MacGibbon previously said Australia should reject the idea of replicating Silicon Valley.

The report [PDF], produced by Data61, Sydney-based fintech hub Stone & Chalk, KMPG, and the Australia Israel Chamber of Commerce, says that Australia is too dependent on others for the protection of its most critical information, pointing to the fact that the country would never outsource its military to foreign companies as a comparison to why such technology should be created down under.

"[Australia has] the talent and collective ability to create a viable industry; however, we have lacked focus and prioritisation," the report says.

"Australia must start by building on what it has to address the spectrum of shortcomings of its disparate industry capability. Collaboration is imperative."

The report also said that if Australia is to develop a cybersecurity industry, it must start by building on what is already in existence rather than attempting to start over again.

"For most startups, corporates can offer immediate help by bringing them on board as a supplier -- it is a misconception startups are only after funding," the report explains. "More collaboration will also teach corporates the benefits of embracing the startup business model to avoid stifling creativity."

For Data61's new way of working, organisations will need to become "startup ready", which the report suggests will require corporates and government to re-engineer their procurement processes, create testing environments, and use smarter approaches to managing risk.

"The opportunity for government to lead the way by being a customer to more startups is massive as agencies rely heavily on imported technology," the report adds.

In a bid to overcome such hurdles, Data61 explained that it has also created a national cybersecurity innovation program that is led by demand from the financial services sector and aligned to the federal government's Cyber Security Growth Centre initiative.

The report comes as a result of the National Fintech Cyber Security Summit that was held in May of 2016 by Data61, and forms phase one of the organisation's fintech and cybersecurity roadmap.

Phase two will include the launch of a National Fintech Cyber Security Innovation Challenge, which will bring specific organisations together who are seeking to collaborate with entrepreneurs and researchers to beat the challenges faced by the fintech and cybersecurity sectors in Australia.

The third phase will see the launch of the Cyber Security Innovation Lab, which will be established in the coming months, while phase four will see the incubation and commercialisation of the industry-changing ideas.

According to Data61 CEO Adrian Turner, the country needs to build international linkages as Australians are "citizens of a networked world", adding that pulling global knowledge back into Australia will help point innovators in the right direction in order to stay ahead of the cybersecurity game.

"Industry, government, academia, and investors need to come together to solve this. This is bigger than any one company we need to work across stakeholder groups," Turner said.

"As a country we underestimate the depth and breadth of the cybersecurity issue, and we underestimate the opportunity to build a new industry.

"When I speak with directors of ASX-listed companies, the general feedback is we understand there is an issue, but we are not properly across it."

The Australian government launched its Cyber Security Growth Centre in December, a not-for-profit responsible for driving the development of a "vibrant and globally competitive" cybersecurity industry in Australia. Led by former head of security for Australian startup darling Atlassian Craig Davies and senior vice president and group executive for IBM Doug Elix, the growth centre will also be responsible for ensuring Australian businesses can take advantage of the growing market opportunity in cybersecurity.

Prime Minister Malcolm Turnbull initially pledged AU$30 million through to 2019-20 in December 2015 as part of the government's AU$1.1 billion National Science and Innovation Agenda to establish the centre in a bid to grow and strengthen Australia's cybersecurity industry.

Turnbull expects the growth centre will work closely with industry sectors across Australia to build the quantity and professionalism of the nation's cybersecurity workforce to become globally competitive and respected.