The European Commission is well known for talking a lot but, at times, doing very little. The Europea Banking Authority is out with a report today telling the Commission to pick up the pace when it comes to cross border activity in banking, payments and more. Of course, removing barriers to cross border economic activity is core to the European Union but while the concept is simple, it has been quite difficult to actually get things done.
Developed under the EBA’s Fintech Roadmap, the EBA Report calls on the European Commission to “facilitate cross-border access, including the update of interpretative communications on the cross-border provision of services and further harmonisation of consumer protection, conduct of business and AML/CFT requirements, in order to facilitate the scaling up of activity cross-border.”
The EBA notes that digital solutions, IE Fintech, is good for consumers and businesses. The “full potential of these solutions has not yet been achieved,” says the EBA. This is due to member states and their diverse and fragmented approach to regulation. Meanwhile, it is obvious that streamlining financial services will be good for everyone involved and will increase the competitiveness of the EU while pursuing its Single Market goal.
The EBA states:
“EBA guidance and further supervisory convergence would be desirable, to overcome issues that, in isolation or in combination, may currently diminish the appetite for institutions, including new-entrant Fintech firms, to provide financial services across borders. Should these issues be addressed, the attractiveness of the provision of services in this way could be enhanced, supporting the scaling up of services, particularly in the digital space. This, in turn, could contribute to improving market efficiency, promoting more choice for consumers and enhancing the competitiveness of the EU Single Market.”
A Student of the Obvious
So why, can’t the EC do its job?
The EBA adds:
“[The] current European Commission interpretative communications do not reflect technological developments or accurately specify criteria for digital activity to be classified as cross-border; therefore, further European Commission guidance is sought.”
“Some variations in national law … may result in unintended obstacles to the cross-border provision of financial services and should be addressed in order to facilitate the scaling up of financial services across borders.”
In particular, issues related to “authorizations and licensing, consumer protection, conduct of business requirements and anti-money laundering (AML) and countering the financing of terrorism (CFT),” must be harmonized.
If the Commission does not act it will impede economic activity and, importantly, the development of Fintech firms to provide banking, payment and other services across the EU.
On a global basis, it will undermine Europe’s ability to compete with other large markets.
So can the European Commission get their act together?
Below: EBA Report on potential impediments to the cross-border provision of banking and payment services
EBA Report on potential impediments to the cross-border provision of banking and payment services