EPFSF Briefing on The European FinTech Action Plan 7 November 2017

Transcription

1 EPFSF Briefing on The European FinTech Action Plan 7 November 2017 Introduction Consumers around the world are quickly becoming digital. They want to manage their life and money more proactively, to simplify and streamline the management of their financial portfolio, their insurance and be able to derive tangible benefits from their service providers. As a result, consumers expect a new kind of service proposition from the financial services providers, fitting to the digital age. Financial Technology (FinTech) has the potential to make financial services more attractive and more accessible for clients. It is seen as the new phenomenon, often mistakenly understood as referring only to start-ups or tech-giants disrupting traditional financial players with innovative solutions or leaving them outside of the digital revolution. The FinTech concept is, in fact, much broader and complex than that. FinTech refers to financial and technology meaning finance enabled by or provided via new technologies (such as data analytics, cloud computing, artificial intelligence, Distributed Ledger Technology ) and affects the whole financial sector in all its components (products, services, infrastructure). The FinTech concept should be connected to the products and services offered to the client i.e. activity/services based, regardless of the kind of legal entity it is. The development of FinTech represents a great occasion to shape a more competitive and innovative European financial sector and spur different actors (financial institutions universities, SMEs, innovative start up) to create new paradigms of collaboration and synergies to shape the products and services of the future. It could also be an opportunity to competitively position Europe globally, for the benefit of consumers, citizens, businesses, or public authorities with a forward-looking approach ensuring that data protection and trust in financial services remain adequate and maintaining high standards for cybersecurity. However, to achieve this objective further consideration needs to be given to the current regulatory challenges or potential risks for the financial stability. 1

2 Public authorities and policy makers assessing the impact of FinTech Stringent prudential, security, investor and consumer protection regulation are an inherent part of the regulatory framework in which financial services providers have to operate and which has been reinforced in recent years. Public authorities and policy makers at international and EU level have therefore started to examine the impact that FinTech may have on the market and the financial system, looking also at regulation and supervision. At EU level In November 2016, the European Commission set up a Financial Technology Task Force (FTTF) with the aim of bringing together several internal services responsible for financial regulation and for the Digital Single Market, along with other experts dealing with competition and consumer protection policy to formulate policy-oriented recommendations and propose measures in the course of On 23 March 2017, in addition to the publication of the Consumer Financial Services Action Plan with a specific focus on technology, the European Commission published a public consultation entitled FinTech: a more competitive and innovative European financial sector. The objective of the consultation was to gather input from stakeholders to further develop the Commission s policy approach towards technological innovation in financial services (see summary of contributions to the Public Consultation).The European Commission is expected to publish, an action plan or a roadmap on FinTech in On 17 May 2017, the European Parliament adopted a resolution on FinTech: the influence of technology on the future of the financial sector The report called for the application of three main principles a) Same services, same risks : the same rules should apply, regardless of the type of legal entity concerned or its location in the EU; b) Technology neutrality and c) Risk-based approach taking into account the proportionality of legislative and supervisory actions to risks and materiality of risks. MEPs called on the European Commission to prepare an action plan in the framework of Capital Markets Union and Digital Single Market. On 4 August 2017, the European Banking Authority (EBA) published a Discussion Paper on the EBA s approach to financial technology (FinTech). In this document the EBA presents the results of its EU-wide FinTech mapping exercise and some proposals for future work on FinTech. On 21st September 2017, the European Central Bank (ECB) launched a public consultation on two draft guides which explain the process of how entities can become banks and obtain a banking licence. One of these guides is dedicated to entities with a FinTech business model willing to ask for a banking licence and it aims at ensuring that all license applications are treated by Supervisory Authorities in the same way. At International level At G20 level, the Financial Stability Board (FSB) published a report on the financial stability implications from FinTech on 27 June Ten areas have been identified, of which the following three are seen as priorities for international collaboration: a) the need to manage operational risk from third-party service providers; b) mitigating cyber risks; and monitoring macrofinancial risks that could emerge as FinTech activities increase. In addition, in August 2017, the Basel Committee on Banking Supervision released a consultative document on the implications of FinTech for the banking sector entitled: Sound practices: Implications of FinTech developments for banks and bank supervisors. It assesses how technology-driven innovation in financial services, may affect the banking industry and the activities of supervisors in the near to medium term. 2

3 National initiatives to proactively engage with FinTech We also observe several policy approaches developed by national public authorities to proactively engage with FinTech and facilitate its growth such as: innovation hubs aiming at supporting, advising or guiding regulated or unregulated innovative firms to understand better - and adapt to - the regulatory environment; FinTech accelerators which are for the most part created and run by private entities; sandboxing regimes which allow businesses to test innovative products, services, business models and delivery mechanisms in the real market, with real consumers. Conclusion It is crucial for Europe to not miss opportunities arising from this wave of FinTech innovation and to make the EU an appealing place where Financial Technology companies can develop their full potential to bring concrete benefits for European consumers while ensuring wider financial stability. Europe should position itself at the heart of this digital revolution by giving all actors in the Financial Technology field the possibility to embrace those changes rapidly. It means creating the right ecosystem for FinTech companies to deploy their potential, both new start-ups and incumbents. With FinTech being a global market, it is also important to ensure international regulatory consistency to avoid regulatory arbitrage and to support European FinTech providers global competitiveness. Policy makers have a crucial role to play in order to address the current regulatory challenges or potential risks for financial stability that may arise from these new technologies. They are tasked with finding the right balance between innovation, security, (proportionate) regulation and consumer protection while at the same time guaranteeing a level playing field among all the actors, geographies and legislations involved. Finding a proper balance, and future-proofing it, will be one of the main (and on-going) challenges for policymakers, regulators and supervisors in the years ahead: how to encourage the development of financial technology and to bring dynamism and competition into the financial sector both for incumbents and new entrants without leaving it open to new risks or significant failures and thereby endangering financial stability, with possible loss of public confidence, or creating an uneven regulatory framework.

4 Financial Industry Committee Aareal Bank Accountancy Europe Argus Media Association for Financial Markets in Europe (AFME) Banco Bilbao Vizcaya Argentaria (BBVA) Banco Santander Barclays BlackRock Chartered Financial Analyst Institute (CFA) Commerzbank AG Crédit Agricole Danske Bank Deloitte Depository Trust & Clearing Corporation (DTCC) Deutsche Bank AG Euroclear Eurofinas - Leaseurope European Association of Public Banks (EAPB) European Banking Federation (EBF) European Fund and Asset Management Association (EFAMA) European Money Markets Institute (EMMI) European Mortgage Federation European Covered Bond Council (EMF-ECBC) European Payment Institutions Federation (EPIF) European Savings and Retail Banking Group (ESBG) Federation of European Securities Exchanges (FESE) Goldman Sachs International HSBC NEX Group ING International Swaps and Derivatives Association (ISDA) Insurance Europe Intesa Sanpaolo JP Morgan KBC KPMG Liechtenstein Bankers Association (LBA) London Stock Exchange Group (LSEG) Nasdaq NVB Dutch Banking Association PensionsEurope PricewaterhouseCoopers S&P Global Société Générale State Street Swiss Finance Council TheCityUK UBS AG UniCredit Group Union Asset Management Holding AG VISA Europe Western Union International Zurich Insurance Company 3

5 Steering Committee Nedzhmi Ali MEP Burkhard Balz MEP (Chair) Brando Benifei MEP Kostas Chrysogonos MEP Daniel Dalton MEP Esther De Lange MEP Pilar Del Castillo MEP Mady Delvaux MEP Herbert Dorfmann MEP Frank Engel MEP Ashley Fox MEP Neena Gill MEP Ana Maria Gomes MEP Roberto Gualtieri MEP Antanas Guoga MEP Brian Hayes MEP Roger Helmer MEP Monika Hohlmeier MEP Gunnar Hökmark MEP Danuta Maria Hübner MEP Catalin Sorin Ivan MEP Eva Kaili MEP Othmar Karas MEP Sean Kelly MEP Georgios Kyrtsos MEP Alain Lamassoure MEP Boguslaw Liberadzki MEP Olle Ludvigsson MEP Ivana Maletic MEP Roberta Metsola MEP Siegfried Muresan MEP Sirpa Pietikäinen MEP Georgi Pirinski MEP Godelieve Quisthoudt-Rowohl MEP Dominique Riquet MEP Paul Rübig MEP Andreas Schwab MEP Davor Škrlec MEP Ivan Stefanec MEP Theodor Dumitru Stolojan MEP Kay Swinburne MEP (Vice-Chair) Michael Theurer MEP Ramon Tremosa i Balcells MEP Beatrix von Storch MEP Steven Woolfe MEP Auke Zijlstra MEP Jana Zitnanska MEP Briefing notes are prepared by the Financial Industry Committee to the European Parliamentary Financial Services Forum. For further information on the subjects raised in the briefs please contact the Chairman, Members or Secretariat of the Financial Industry Committee. Chairman Financial Industry Members Peter de Proft, Director General, EFAMA Rue Montoyer 47, B-1000 Brussels Tel: peter.deproft@efama.org Secretariat David Reed, EPFSF Director 2/4, Rond-Point Schuman, BE-1040 Brussels Tel: secretariat@epfsf.org 4