European banking supervisors issued publications on fintech and Big Data

European banking supervisors issued publications on fintech and Big Data

Recently, several European banking supervisors issued publications on financial technology (fintech) companies and big data.

First of all, the Basel Committee on Banking Supervision (BCBS) published a paper on the potential implications and impact of FinTech developments for banks and bank supervisors. The BCBS concludes that there is no consensus on whether the revenues of banks are at risk. Some market observers believe that banks will improve their efficiency and excel against new competitors. In the scenarios evaluated, a general conclusion is that banks will have difficulties maintaining current operating models and that data will become a key driver for new business models. Therefore, banks must adapt to innovations while maintaining prudential standards. Furthermore, improvements in customer relationships will become more important. The BCBS recognizes that it should support by achieving a common understanding of risks and opportunities associated with fintech in the banking sector. The BCBS plans to do this by first describing observed practices before defining requirements or technical recommendations.

Concurrently, the European Banking Authority (EBA) published its Fintech Roadmap describing the priorities for 2018/2019. The EBA will focus on areas such as monitoring the regulatory perimeter and licensing approaches to fintech firms. The EBA will also focus on monitoring trends in the market and examine the impact on incumbent institutions’ business models. The EBA started a new Fintech Knowledge Hub to provide the knowledge and expertise on its fintech activities.

The European Supervisory Authorities (ESAs) published a report on the impact of Big Data on consumers and financial firms. Risks and benefits entailing big data are analyzed in the report and the ESAs conclude that any legislative intervention would be premature at this point in time. Existing legislation provides sufficient risk mitigation measures on the risks identified.

Finally, the European Commission formulated an action plan in order to anticipate the opportunities presented by fintech firms. The Commission aims to make Europe a global hub for fintech, where EU businesses and investors can benefit from the advantages offered by the Single Market, including new rules to enable the growth of crowdfunding platforms.