On April 8, APRA warned it would not issue new licenses for at least six months, saying it did not think it was “reasonable” to issue new licenses when the coronavirus outbreak was already making it difficult for established companies to operate.

But the shutdown was blasted by Australian fintech.

“APRA’s decision to refuse to grant banking licences [will] stifle innovation when it is most needed,” said Rebecca Schott-Guppy, General Manager of FinTech Australia. “A minimum six-month delay in licensing could bring down fintech companies seeking that license and cost us jobs, they can’t afford to tread water for that long.”

Ms Schott-Guppy disagreed with APRA's premise that the outbreak would make it harder for new entrants to succeed, arguing that some of the "biggest start-ups in the world" - including Square, Slack and WhatsApp - were founded on time of the GFC.

"Instead, Australia should welcome new entrants, giving them the opportunity to compete and supporting fintech and partnerships with large companies," Ms Schott-Guppy said. “Many companies have accelerated their own digital transformations in lieu of COVID-19. Fintech partnerships play a key role in transforming existing financial services, but they can only do so within a supportive regulatory framework.”

APRA decided not to issue new licenses due to a "fundamental change in the economic and social environment in Australia".

"In licensing new entrants to the prudentially regulated segments of the financial system, APRA aims to strike an appropriate balance between financial safety and other important community considerations - efficiency, competition, competitiveness and competitive neutrality," APRA chairman Wayne Byres wrote in a letter. "In doing so, APRA is also asked to promote the stability of Australia's financial system."

"Experience shows that it is challenging for new entrants to succeed even under normal economic conditions, so APRA does not consider it prudent to license APRA-regulated companies at this time."