EC Vice President Speaks on the Future of Fintech in Baltics and EU

The EC Vice President added that EC "takes very seriously any threat to financial stability or investor protection." He then outlined the work of EC in the area of fintech, including the fintech Action Plan, which is based on the feedback received on how to best enable a dynamic EU fintech sector. The Action Plan has the three main goals of helping innovative businesses models scale up across the single market, encouraging the uptake of new technologies in the financial sector, and increasing cyber security. With respect to the first goal of scaling up business models, he discussed the role of crowdfunding and regulatory sandboxes. EC has put forward a legislative proposal for an EU license for crowdfunding. This would allow both lending and investment-based crowdfunding platforms to operate across the EU, based on a single authorization, thus eliminating the need to comply with 28 different sets of requirements. EC will also present a blueprint with best practices on regulatory sandboxes, which have, in general, "proven very effective both for companies and supervisors."

Toward the second goal of facilitating the uptake of new technologies, EC plans to set up an Expert-Group to look into possible regulatory obstacles to financial innovation and to review the EU rules that pre-date the emergence of digital technologies. EC will also establish an EU FinTech Lab, for supervisors to engage with technology providers in a neutral space. He then discussed the need to tackle obstacles hindering companies from using services such as cloud computing, particularly the barriers to the cross-border flow of data and inconsistent rules on the outsourcing of activities to the cloud. He added that the upcoming General Data Protection Regulation will help in this, by establishing the free movement of personal data across the EU. Additionally, last year, EC came forward with additional proposals to remove data localization requirements. As part of the fintech Action Plan, EC will also invite ESAs to explore the issuing of guidelines to facilitate the use of cloud services. He highlighted the need to further monitor crypto-assets and initial coin offerings. Thus, EC has established an EU Blockchain Observatory and Forum to report on the challenges and opportunities of crypto-assets later this year.

With respect to the third goal of increasing cyber security, the EC Vice President added that strong cyber resilience requires a collective approach. To this end, EC will organize a public-private workshop to address barriers to information-sharing among market participants on cyber threats. EC has also asked ESAs to consider issuing guidelines for how supervisors should deal with information technology risks and advise EC on the need for potential legislation. Additionally, as part of the Action Plan on Consumer Financial Services, EC is working to promote cross-border retail financial services in Europe. Next week, EC plans to propose to make cross-border payments in euros cheaper in non-euro countries, which means that those payments will be priced the same as domestic payments in the national currency. Mr. Dombrovskis concludes that, with these initiatives on fintech, EC is "setting a clear direction for the Baltics and for Europe: to remain at the peak of global financial innovation, competition, and consumer-friendliness."

Related Link: Speech

Keywords: Europe, EU, Banking, Securities, Fintech, Regulatory Sandbox, Action Plan, Cyber Risk, EC