14 June 2018

EBA stepping up its work on FinTech

In March 2018, the European Banking Authority (EBA) published a FinTech Roadmap setting out its priorities for 2018/2019, as a follow-up to its 2017 FinTech Discussion Paper and the European Commission’s 2018 FinTech Action Plan. The EBA has now provided an update of the timeline envisaged at the time of the FinTech Roadmap.

In August 2017 the EBA published a Discussion Paper on its approach to FinTech. In that paper, the EBA set out the results of its preliminary FinTech mapping in the EU and proposed several FinTech policy areas to be addressed in 2018 and 2019. In March 2018, after receiving feedback on the Discussion Paper, the EBA issued the Fintech Roadmap describing its next steps and indicative milestones for 2018/2019. The June 2018 newsletter gives an updated indicative timeline for the work set out in the EBA FinTech Roadmap.

The EBA has previously identified the following priorities:

  • monitor the regulatory perimeter, including assessing current authorisation and licencing approaches to FinTech firms, and analyse regulatory sandboxes and innovation hubs in order to identify a set of best practices to enhance consistency and facilitate supervisory coordination
  • monitor emerging trends and analyse the impact on incumbent institutions’ business models and the prudential risks and opportunities arising from the use of FinTech
  • promote best supervisory practices on assessing cybersecurity and promote a common cyber threat testing framework
  • address consumer issues arising from FinTech, in particular the unclear regulatory status of FinTech firms and related disclosure to consumers, potential national barriers preventing FinTech firms from scaling up services to consumers across the single market, and the appropriateness of the current regulatory framework for virtual currencies
  • identify and assess money laundering or terrorist financing risks associated with regulated FinTech firms, technology providers and FinTech solutions.

 

The indicative timeline has been updated as follows:

 

AUTHORISATION AND REGULATORY PERIMETER ISSUES

2018

  • Survey issued to competent authorities, EBA analysis of responses
  • Report (and, if appropriate, Opinion) issued

2019

  • Ongoing monitoring of the regulatory perimeter, including review of Member State responses to new and innovative financial activities and analysis of the need for changes at EU level

 

REGULATORY SANDBOXES AND INNOVATION HUBS

2018

  • Survey issued to competent authorities, EBA analysis of responses
  • Report (and, if appropriate, Opinion) issued, including Guidance to enhance supervisory consistency and facilitate supervisory coordination in the operation of regulatory sandboxes

2019

  • Ongoing monitoring of developments, sharing of good practices
  • Assessment of the need for further coordination or convergence work

 

IMPACT ON BUSINESS MODELS, PRUDENTIAL RISKS AND OPPORTUNITIES

2018

  • Survey issued to competent authorities, EBA analysis of responses
  • Report (and, if appropriate, Opinion) issued, including Guidance to enhance supervisory consistency and facilitate supervisory coordination in the operation of regulatory sandboxes

2019

  • Ongoing monitoring of developments, sharing of good practices
  • Assessment of the need for further coordination or convergence work

 

CYBERSECURITY

2018

  • ICT risk guidelines addressed to institutions providing guidance for evaluating and mitigating ICT risks including cybersecurity risks
  • Harmonised supervisory practices on cybersecurity
  • Follow-up work in relation to EBA security-related mandates under PSD2

2019

  • Follow-up work as appropriate (e.g. cyber threat testing framework in alignment with other EU initiatives)

 

CONSUMER AND CONDUCT ISSUES

2018

  • Report issued on cross-border issues identifying potential national barriers from consumer and conduct of business requirements
  • Report issued on consumer-related disclosure aspects
  • Consideration of consumer and conduct of business related aspects in the context of the authorisations/perimeter work

2019

  • Assessment of potential financial exclusion (from Big Data algorithms)
  • Assessment of the applicability of the ADR Directive to FinTech firms and further actions if needed
  • Follow-up work as appropriate

 

ANTI-MONEY LAUNDERING (AML) / COUNTERING FINANCING OF TERRORISM (CFT)

2018

  • Fact-finding exercise on ML/TF risk associated with FinTech solutions and providers Report issued on consumer-related disclosure aspects
  • Amended Risk Factors Guidelines issued
  • Joint Opinion issued on the ML/TF risks affecting EU’s financial sector

2019

  • Ongoing monitoring of developments and assessment of the need for further work
  • Ensuring the harmonisation of supervisory practices through various knowledge-sharing initiatives

 

VIRTUAL ASSETS

2018

  • Regulatory mapping of current licensing requirements, prudential and conduct of business treatment Amended Risk Factors Guidelines issued

2019

  • Ongoing monitoring of developments and, where appropriate, further work to ensure proper risk mitigation

The update consists mainly of an elaboration on the follow-up work for authorisation and regulatory perimeter issues, regulatory sandboxes and innovation hubs, impact on business models, prudential risks and opportunities and AML/CFT. Virtual assets have also been added as a separate topic, starting with a regulatory mapping exercise in 2018.

When embarking on this follow-up work, the EBA will make use of its new FinTech Knowledge Hub, an overarching forum that brings together competent authorities to enable knowledge-sharing and enhancing engagement with incumbent firms as well as FinTech firm.

De Brauw has highlighted the FinTech-related elements of the EBA’s June newsletter. For the complete newsletter, please click here