Reforming Europe’s FinTech sector
A group of financial sector experts established by the European Commission, recently published a report to help govern and improve Europe’s FinTech economy.
The ‘Expert Group on Regulatory Obstacles to Financial Innovation’ was established by the European Commission in 2018. Professor Tom Butler, Principal Investigator of UCC’s Governance Risk and Compliance Technology Centre and a member of Lero, the Irish Software Research Centre, was a key member of the EC expert group.
“Removing regulatory obstacles to digital innovation and creating a climate in which existing firms and new entrants such as FinTechs and digital banks can prosper has the potential to deliver enormous benefits for the European economy” commented Professor Butler. “More effective digital technologies and efficient financial and regulatory processes provide numerous benefits for consumers. However, the Group were also conscious of need to protect consumers from the downside risks associated with certain technologies, such as AI, and to ensure a level playing field across financial markets to mitigate the risk of digital monopolies emerging.”
The expert Group recommends action in four broad areas:
- the need for a positive response to use of emerging technologies by financial institutions and FinTech companies, while also mitigating risks associated with the application of digital technologies such as Artificial Intelligence (AI), Distributed Ledger Technologies, quantum computing, and crypto assets;
- the need to remove fragmentation across the EU and ensure a level playing field between different participants in the financial services sector as they leverage new technologies;
- the necessity to reconcile data protection with the opportunities offered by FinTech;
- the need to consider the potential impact of FinTech on consumers, from the perspective of financial inclusion, risk mitigation and the ethical use of data.
The Group submits its report in the expectation that it will be carefully considered by the European Commission when drafting the Digital Finance Strategy.