European Banking Authority Publishes its Fintech Roadmap

Following in the footsteps of the European Commission’s Fintech Roadmap, the European Banking Authority (EBA) has released its opinion as to how to best foster and promote Fintech adoption.

The EBA’s Fintech Roadmap is the result of a recent consultation as to how the Authority should best embrace Fintech innovation. Andrea Enria, the EBA’s Chairperson, said the EBA’s Knowledge Hub will ensure that EU supervisors share best practices and adopt a technologically neutral approach to the application of new technologies in the financial sector. “This will help facilitate innovation and scalability across the single market.”

Enria recently delivered a speech in Copenhagen that had a cautious tenor regarding the possible over-regulation of emerging technology. Enria said at that time;

“…conscious choice by regulators of not imposing the full set of rules on a nascent technology can lead, as the technology gains pace, to a more mature and productive dialogue among innovative firms.”

The priorities for 2018 and 2019 are as follows:

  • Monitoring the regulatory perimeter, including assessing current authorisation and licencing approaches to Fintech firms, and analysing regulatory sandboxes and innovation hubs in order to identify a set of best practices to enhance consistency and facilitate supervisory coordination;
  • Monitoring emerging trends and analysing the impact on incumbent institutions’ business models and the prudential risks and opportunities arising from the use of Fintech,
  • Promoting best supervisory practices on assessing cybersecurity and promoting a common cyber threat testing frame-work;
  • Addressing consumer issues arising from FinTech, in particular in the areas of unclear regulatory status of Fintech firms and related disclosure to consumers,  potential national barriers preventing Fintech firms from scaling up services to consumers across the single market, and the appropriateness of the current regulatory framework for virtual currencies;
  • Identifying and assessing money laundering/terrorist financing risks associated with regulated FinTech firms, technology providers and Fintech solutions.

The EBA believes Fintech can offer a range of benefit. There is the potential for Fintech to enhance consumer choice and experience, reduce the costs of financial products and services, promote financial inclusion, drive efficiencies in the provision of financial services, facilitate cost reduction and support more effective compliance and reporting processes.

The EBA wants to support development of FIntech innovation with a consistent and technologically neutral regulatory and supervisory approach allowing the scaling-up of financial innovations across the Single Market. The EBA seeks to accomplish this without undermining consumer protection and the integrity of the financial markets.

Regarding cryptocurrencies or virtual currencies, during 2018 the EBA, in coordination with the other ESAs, will perform a regulatory mapping of the current requirements on virtual currencies in order to assess whether the current framework in place is appropriate with a view of publishing an EBA report and/or opinion addressed to EU legislators.

The Fintech Roadmap sets out a timeline of next steps in relation to the policy priorities identified in the Roadmap. During 2018, the EBA expects to issue publications spanning all priority policy areas identified in the Roadmap and will continue to engage in EU and international FinTech initiatives.

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