EBADiscussion Paper on the EBA's approach to financial technology (FinTech)

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European Banking Authority (EBA)

Release date:
August 2017

European Banking Authority, EBA/DP/2017/02

Article 1(5) of the Regulation establishing the EBA (Regulation (EU) No 1093/2010) requires the EBA to contribute to enhancing consumer protection, promoting a sound, effective and consistent level of regulation and supervision, ensuring the integrity, transparency, efficiency and orderly functioning of financial markets, preventing regulatory arbitrage and promoting equal competition. In addition, Article 9(2) requires the EBA to monitor new and existing financial activities.

These mandates are key motivations underpinning the EBA's interest in financial innovation in general and more specifically FinTech, which can be defined as 'technologically enabled financial innovation that could result in new business models, applications, processes or products with an associated material effect on financial markets and institutions and the provision of financial services'.

To gain a better insight into the financial services offered and financial innovations applied by FinTech firms in the EU, and their regulatory treatment, in spring 2017 the EBA undertook a FinTech mapping exercise. Competent authorities in 22 Member States and 2 EEA States provided estimates on the current number and expected growth of FinTech firms established in their respective jurisdictions and detailed information on a sample of FinTech firms, including information on main financial innovations applied, main financial services provided, regulatory status and target end-users.

Based on the mapping exercise, the work done by other intergovernmental and EU bodies related to FinTech and previous work that the EBA has conducted on specific innovations, this Discussion Paper (DP) suggests that there is merit in the EBA carrying out follow-up work in a number of areas. These are: authorization and sandboxing regimes; prudential risks for credit institutions, payment institutions and electronic money institutions; the impact of FinTech on the business models of these institutions; consumer protection and retail conduct of business issues; the impact of FinTech on the resolution of financial firms; and the impact of FinTech on anti-money laundering and countering the financing of terrorism.

For each of these six areas, the DP identifies a number of 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 aim of the DP is to seek the views of external stakeholders on the EBA’s assessment and on the comprehensiveness and viability of the possible future work in the areas identified.

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