EC launches FinTech regulation joint initiative
Written by Hannah McGrath
The European Commission (EC) has launched a new cross-border initiative encouraging collaboration between national regulators and governments on to grow the FinTech economy.
The European Forum for Innovation Facilitators (EFIF) is aimed at supporting regulators to share information and work together on plans for innovation hubs and regulatory sandboxes.
In a speech marking the inaugural meeting of the EFIF, Valdis Domobrovskis, vice-president for financial stability and financial services, praised work to establish 21 innovation hubs and five regulatory sandboxes in the EU, but noted that some EU countries - such as the UK - were far more advanced in their regulatory approach to FinTech than others.
“When it comes to encouraging financial innovation, there is no denying that some countries have advanced further than others,” he said. “For example, the innovation hub of the United Kingdom's Financial Conduct Authority is reported to be serviced by over 30 staff, including some that are full-time; this is much more than others have.”
The EFIF, he said, would help FinTech economies at different stages of maturity to identify and address challenges at an EU level, and he called for “a common EU supervisory culture for technological innovation”.
The initiative is part of the EU’s overarching FinTech Action Plan, adopted by the EC in March last year, which aimed to set out a path to greater innovation and competition in the EU’s financial industry.
Describing the EFIF as a “harmonised approach” to FinTech supervision, Domobrovskis said: “By creating the EFIF, we aim to create a favourable environment for FinTech startups to scale-up and flourish in Europe; innovation is a key component of the engine supporting the economic growth of the EU".
“Supervisors represent the first point of contact for innovative companies that are trying to enter the market, so are they ready to accommodate this innovation, and tackle the risks that it brings?” he asked.
Reflecting on the rapid rise of FinTech firms across the EU, Domobrovskis noted “a wave of digitalisation that is washing over the sector” and predicted further disruption to the financial services industry and incumbent institutions in the form of new and innovative banking services and consumer-focused technologies.
However, whilst much progress had been made in the proliferation of FinTech solutions in retail banking, Domobrovskis said that FinTech as an industry was “still in its early days”.
He explained that this means there is plenty of unrealised potential for ground-breaking innovation. “With the block chain and distributed ledgers, companies could drastically cut costs, reduce intermediaries, and increase safety for consumers, and more disruption is on the horizon, with cloud computing, artificial intelligence and machine learning.”
His speech concluded: “By better cooperating and learning from each other, we can help turn the single market into an environment where FinTechs can innovate, scale up, and compete; this is the best way for Europe to surf the wave of financial innovation.”