Featured Product

    EBA Examines Implications of Increasing Use of Digital Platforms in EU

    September 21, 2021

    The European Banking Authority (EBA) published a report on the use of digital platforms in the banking and payments sector in European Union. In light of the rapid growth in the use of digital platforms in the banking and payments sector, EBA, in its report, identifies steps to enhance the monitoring of market developments, though EBA did not identify the need for any specific legislative changes at this stage. EBA plans to help competent authorities deepen their understanding of platform-based business models in 2022 through an information gathering exercise and has proposed certain actions post this information gathering exercise. These proposals will be further considered in the context of the EBA work (and the wider work of European Supervisory Authorities or ESAs) in relation to the joint ESA response to the European Commission’s Call for Advice on digital finance, which will be published in the first quarter of 2022.

    The EBA report offers an overview of the digital platform landscape in European Union and examines the opportunities and challenges stemming from platformization, before moving on to provide supervisory perspectives with respect to monitoring risk in the platform economy. The report highlights that EBA has observed a rapid growth in the use of digital platforms, which present a range of opportunities for customers and financial institutions in EU. The increasing reliance of financial institutions on digital platforms for the marketing and distribution of financial services is creating new forms of financial, operational, and reputational interdependencies in the banking and payments sectors. Thus, in the report, EBA identifies a series of actions to improve supervisors’ understanding of emerging business models and visibility over new forms of interconnection in the financial system. EBA also sets out steps to better monitor market developments and implement changes, where needed. As a priority, in 2022, EBA will help competent authorities to deepen their understanding of platform-based business models and the opportunities and risks arising from these models by supporting competent authorities in:

    • developing common questionnaires for regulated financial institutions on digital platform and enabler use, with the aim to facilitate tailored and proportionate information-gathering for a fast-evolving market.
    • sharing information about financial institutions’ reliance on digital platforms and enablers to facilitate coordinated European Union-wide monitoring.

    Building on this information gathering exercise, EBA proposes to

    • develop a framework to facilitate the aggregation of information about financial institutions’ dependencies on digital platforms and enablers to identify cumulative dependencies in the context of the marketing and distribution of financial products and services.
    • establish indicators that could help in assessing potential concentration, contagion, and potentially future systemic risks and could be taken into account in the context of supervision.
    • continue its efforts to foster the sharing of supervisory knowledge and experience about digital platforms and enablers on a sectoral and multi-disciplinary basis, to enhance effective dialogue between authorities responsible for financial sector supervision, consumer protection, data protection, and competition, including via actions under the coordination of the Fintech Knowledge Hub of EBA.

    EBA also highlights its previous recommendations for the European Commission to update its interpretative communications relating to when a digital activity should be considered as a cross-border provision of services. EBA  reminds financial institutions of their obligations to ensure effective governance and operational risk management when leveraging digital platforms and enablers. Financial institutions are also reminded of the need to ensure high standards of consumer protection. Further observations and a set of recommendations related to the digital transformation of the EU financial sector will be set out in the joint ESAs response to the European Commission Call for Advice on digital finance.

     

    Related Links

    Keywords: Europe, EU, Banking, Digital Platforms, Payments and Market Infrastructure, AML/CFT, Call for Advice, Fintech, Platformization, Systemic Risk, Regtech, Lending, ESAs, EC, EBA

    Featured Experts
    Related Articles
    News

    EBA Clarifies Use of COVID-19-Impacted Data for IRB Credit Risk Models

    The European Banking Authority (EBA) published four draft principles to support supervisory efforts in assessing the representativeness of COVID-19-impacted data for banks using the internal ratings based (IRB) credit risk models.

    June 21, 2022 WebPage Regulatory News
    News

    BIS Hub Updates Work Program for 2022, Announces New Projects

    The Bank for International Settlements (BIS) Innovation Hub updated its work program, announcing a set of projects across various centers.

    June 17, 2022 WebPage Regulatory News
    News

    US Senate Members Seek Details on SEC Proposed Climate Disclosure Rule

    Certain members of the U.S. Senate Committee on Banking, Housing, and Urban Affairs issued a letter to the Securities and Exchange Commission (SEC)

    June 16, 2022 WebPage Regulatory News
    News

    EIOPA Consults on Review of Securitization Framework in Solvency II

    The European Insurance and Occupational Pensions Authority (EIOPA) published a consultation paper on the advice on the review of the securitization prudential framework in Solvency II.

    June 16, 2022 WebPage Regulatory News
    News

    UK Authorities Issue Regulatory and Reporting Updates for Banks

    The Prudential Regulation Authority (PRA) issued a statement on PRA buffer adjustment while the Bank of England (BoE) published a notice on the statistical reporting requirements for banks.

    June 15, 2022 WebPage Regulatory News
    News

    BaFin Consults on Resolvability Requirements for Resolution Planning

    The Federal Financial Supervisory Authority of Germany (BaFin) proposed to amend the “Capital Investment Conduct And Organization Ordinance” and issued a draft circular on the minimum resolvability requirements for resolution planning.

    June 10, 2022 WebPage Regulatory News
    News

    EBA Consults on Certain Standards and Guidelines Under CRR and BRRD

    The European Banking Authority (EBA) proposed guidelines, for the resolution authorities, on the publication of the write-down and conversion and bail-in exchange mechanic, with the comment period ending on September 07, 2022.

    June 08, 2022 WebPage Regulatory News
    News

    OJK Publishes Regulatory Updates for Financial Sector Entities

    The Financial Services Authority of Indonesia (OJK) is strengthening cooperation with the Australian Prudential Regulation Authority (APRA) and the Japanese Financial Services Agency (JFSA)

    June 03, 2022 WebPage Regulatory News
    News

    EU Publishes Rules on DLT and Data Governance

    The European Parliament and the Council published Regulation 2022/868 on European data governance (Data Governance Act).

    June 03, 2022 WebPage Regulatory News
    News

    EBA Publishes Phase 2 of Reporting Framework 3.2

    The European Banking Authority (EBA) published phase 2 of its reporting framework 3.2. The technical package supports the implementation of the updated reporting framework by providing standard specifications

    June 03, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8267