The group aims to help make Australia "the leading market for financial technology – or fintech – in the Asia Pacific region", Australian prime minister Malcolm Turnbull and treasurer Scott Morrison said in a joint statement.
Financial services is Australia's largest industry, employing around 450,000 people and worth AU$140 billion (US$100.5 billion) to the economy in the last financial year, the government said.
However, the sector is "increasingly globalised and exposed to technological disruption" and many traditional products are being affected, the statement said.
"New approaches like crowdfunding, peer-to-peer lending, mobile payments, digital currencies, and robo-advisers benefit consumers by increasing choice and stimulating more competition," the government said.
The advisory group will build on the government's $1.1bn National Innovation and Science Agenda (NISA), "which is already improving data accessibility and use and will make it easier for startups to access early stage capital through a new tax incentive for angel investors", the statement said.
The NISA was announced in December and identified four key areas: culture and capital to help businesses take on risk and encourage early stage startup investment; collaboration to increase engagement between businesses, universities, and the research sector; talent and skills to train students for future jobs and attract talent from abroad; and for the government to "lead by example" by investing in, and using technology and data to deliver better quality services.
The group will be chaired by Craig Dunn, director of Westpac bank, and will include senior managers from financial and technology companies.
Luke Scanlon, a financial services technology law expert for Pinsent Masons, the law firm behind Out-Law.com said that the UK has been successful in developing the fintech sector through collaboration between the regulator, industry and government.
"Australian financial services regulators now have the opportunity to use this and other policy developments to present Australia as a place where accelerated adoption of fintech solutions can take place," Scanlon said.
"In the UK, the Financial Conduct Authority has shown willingness to convert policy initiatives into tangible gains for UK fintech businesses by reducing the legal and regulatory burden that they would otherwise face. If the Australian regulators promote their brand in a similar way, the local market will be viewed by more people as having progressive policy and regulatory regimes," he said.
The UK government this month called on EU policy makers to "avoid premature regulation that could hamper, not foster, growth" in the financial services sector and help encourage "emerging financial services technologies". The government was responding to a European Commission consultation which had asked for feedback on whether there are unnecessary regulatory burdens, gaps or inconsistencies in the rules, or laws that hinder economic growth in the EU's legal framework for financial services.