Major Overhaul Aimed at Boosting Security, Innovation, and Efficiency
Australia is preparing to embark on a significant modernisation of its interbank settlement system, aiming to keep pace with technological advances and to improve resilience across its financial sector. The overhaul is set to impact both the regulatory framework and the underlying technology that facilitates the nation’s payment systems.
Key Features of the Modernisation Initiative
- Expanded Regulatory Oversight: The Treasury Laws Amendment (Payments System Modernisation) Bill 2025 introduces a wider regulatory scope for the Payment Systems (Regulation) Act 1998. It will now include entities such as digital wallets, buy now, pay later (BNPL) providers, crypto-asset facilitators, and cash distribution services.
- Ministerial and RBA Powers: The reforms allow the Treasurer to designate nationally significant payment platforms for enhanced oversight, and expand the Reserve Bank of Australia’s (RBA) abilities to address emerging risks in the payment ecosystem.
- Infrastructure and Technology Upgrades: The RBA will upgrade the Reserve Bank Information and Transfer System (RITS), which settles high-value payments in real time, to embrace innovations and strengthen security and operational resilience. This will support faster payments and new forms of settlement, including further adoption of digital technologies.
- Support for Non-bank Providers: Policy changes will make it easier for non-bank payment service providers to access core payment systems and participate directly in settlement, fostering competition and innovation in the sector.
- Resilience and Security: Investments include cloud migration, enhanced cybersecurity measures, and AI compatibility as part of a broader effort to futureproof the system against emerging threats and ensure uninterrupted service for both the government and the wider economy.
Strategic Goals and Timeline
- Implementation by 2026: The RBA is targeting to complete key reforms by late 2025, with the aim of rolling out an upgraded interbank settlement platform in 2026 that leverages modern technology and lessons from wholesale digital money initiatives.
- AI-Enhanced Operations: The RBA is progressing towards becoming an AI-enabled central bank, integrating AI tools throughout operations to boost productivity, decision-making, and risk management.
- Inclusiveness and Diversity: Workforce development is a parallel priority, with the RBA increasing recruitment from outside the institution and striving for greater diversity to reflect the broader Australian community.
The Role of Payments System Reform in Australia’s Economy
Australia’s payments system is critical to the smooth functioning of commerce and government operations. Each year, the RBA processes hundreds of millions of domestic and international transactions, underpinning economic activity and public service delivery. Modernisation is expected to deliver:
- Greater efficiency and speed of payments for consumers and businesses
- Enhanced security to combat cyber threats and operational risks
- Opportunities for fintech and non-bank service providers to innovate
- Improved transparency and oversight for regulators
Looking Ahead
The financial sector, payments industry, and consumers can expect further announcements as the RBA consults on technological upgrades and the government advances its legislative and regulatory agenda. With a clear focus on security, resilience, and innovation, Australia aims to position itself at the forefront of payments and banking modernisation in the Asia-Pacific region.
Looking Ahead
Looking Ahead
