Speaking at a Committee of Economic Development of Australia luncheon in Sydney on Friday, Mr Murray said that given the operation of the financial system involves “the keeping of books and the passing of messages on behalf of clients”, it is hardly surprising that technological developments have had a “profound effect” on the system.
“Perhaps we should bear in mind this is one of the greatest generally applicable technological developments that we have seen and it is still working through all aspects of industry,” he said.
“Some of the more obvious impacts involve high-volume payments, trading, and settlement systems,” said Mr Murray.
As an example, he pointed to the decline of cheques and the popularity of mobile phones and contactless payment options.
“Another example is the ascendency of automated trading on our equity markets where trading is now in microseconds,” said Mr Murray.
“In just the last three years to the end of December 2013, the order to trade ratio on our main equity markets has risen from 5.8 to 8.6; the number of orders has nearly doubled from 3.2 million to over six million per day and the average trade size has dropped from $9,300 to $5,300,” he said.
But most importantly, technology opens up the prospect of self-service, said Mr Murray.
“It also facilities more effective management of highly complex asset liability management systems with large volumes of data in short periods of time and it assists to manage large volumes of client data to continually hone financial product offerings (sometimes for better and sometimes for worse),” he said.
The Murray Inquiry will also examine new risks raised by technological developments such cyber-security, he said.
Mr Murray encouraged further submissions to the inquiry, since they will guide the direction committee takes.
“We intend to produce an interim report mid-year, in which we will describe the system, summarise views and present the issues with different ways of managing them. We will then call for further submissions before completing our final report and recommendations to the Treasurer in November,” he said.
