In order to ensure that the European market becomes a competitive, global hub for Fintech, the European Commission published last week its Fintech Action Plan which aims at encouraging and enabling the European financial sector to make use of new technologies such as artificial intelligence and cloud computing, while ensuring that the market remains safe for all players. The European Commission stressed already during the mid-term review of the Capital Market Union Action Plan the potential of fintech to transform capital markets, bring new innovative payment services and increase safety.
The European Commission recognizes that the development of Fintech has significantly impacted the way financial services are produced and delivered, bringing new opportunities for service providers. But these technology-enabled innovations also raise new challenges and new risks that require updated regulatory and supervisory frameworks, for instance to address the rise of crypto assets and new cybersecurity threats.
The outcome of the European Commission’s consultation of last year revealed that the case for broad legislative of regulatory action at EU level was limited, but that target initiatives could ensure a safe and prosper environment for businesses using and developing fintech solutions. The Action Plan therefore presents 23 steps to “enable innovative business models to scale up, support the uptake of new technologies, increase cybersecurity and the integrity of the financial system”, with the intent of reaching three main objectives:
- Encouraging innovative business models
The European Commission encourages supervisors to help FinTech firms apply rules and access market and wishes to ensure easier and more uniform licensing rules for new FinTech activities. To that end, the European Commission published on 8 March a new proposal for a Regulation on Crowdfunding to ensure uniform rules for platforms and more legal certainty for investors.
- Ensuring stronger cyber security resilience
The European Commission wishes to facilitate the exchange of information regarding cyber threats as well as increase EU coordination in cyber threat testing.
- Supporting the uptake of new technology
The European Commission will assess the relevance of current EU rules regarding new technologies and increase its knowledge through the EU Blockchain Observatory and the establishment of a new EU Fintech Lab. The Commission is currently working on a comprehensive strategy on distributed ledger technology and blockchain, and also wishes to promote the use of cloud services.