EBA Publishes Discussion Paper on Approach to Fintech

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On August 4, 2017, the European Banking Authority (“EBA“) published its discussion paper (EBA/DP/2017/02) on its approach to fintech.

During the spring of this year, the EBA undertook a fintech mapping exercise in order to gain a better insight into the financial services offered and financial innovations applied by fintech firms in the EU, and their regulatory treatment. Competent authorities in 22 member states and two EEA states provided estimates on the current number and expected growth of fintech firms established in their respective jurisdictions. They also provided information on certain of the fintech firms, detailing information on the main financial innovations applied, main financial services provided, regulatory status and target end-users.

The EBA considers that there is merit in it undertaking follow-up work in several areas, as a result of the mapping exercise, work completed by other intergovernmental and EU bodies relating to fintech and previous work that the EBA has done on specific innovations. These areas relate to:

  • Authorization and sandboxing regimes.
  • The impact on the prudential risks for credit institutions and electronic money institutions.
  • The impact of fintech on the business models of the above institutions.
  • Consumer protection and retail conduct of business issues.
  • The impact of fintech on the resolution of financial firms.
  • The impact of fintech on anti-money laundering and countering the financing of terrorism.

In relation to the above areas, the discussion paper points out the issues, summarizes the EBA’s work to date to address them, identifies possible gaps and outlines the additional work that the EBA may wish to pursue. The objective of the discussion paper is to seek the opinions of external stakeholders on the EBA’s assessment and on the comprehensiveness and viability of the possible future work in the areas identified.

Comments can be made until November 6, 2017 and there will be a public hearing on October 4, 2017. The EBA will then assess the responses with the aim of deciding the further steps to be taken during 2018.