The European Banking Authority has launched its ‘FinTech Roadmap’ and published its final report on the benefits and risks of big data.
EBA has set out the establishment of a FinTech Knowledge Hub to enhance knowledge sharing and foster technological neutrality in regulatory and supervisory approaches.
The roadmap describes its priorities for 2018/2019, including monitoring the regulatory perimeter. This involves assessing current authorisation and licencing approaches to FinTech firms, and analysing regulatory sandboxes and innovation hubs. Through this, EBA plans to identify a set of best practices to enhance consistency and facilitate supervisory coordination.
Another priority is assessing cybersecurity and promoting a common cyber threat testing framework, as well as identifying and assessing money laundering/terrorist financing risks associated with regulated FinTech firms, technology providers and FinTech solutions.
The regulator is also looking to analyse the impact on incumbent institutions’ business models and the prudential risks and opportunities arising from the use of FinTech. In addition, it plans to address consumer issues arising from FinTech, in particular in the areas of unclear regulatory status of FinTech firms and related disclosure to consumers. As part of the roadmap, EBA plans to examine the 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.
Andrea Enria, the EBA’s Chairperson, said: “The EBA’s Knowledge Hub will ensure that EU supervisors share best practices and adopt a technologically neutral approach to the application of new technologies in the financial sector. This will help facilitate innovation and scalability across the single market.”
The Joint Committee of the European Supervisory Authorities (ESAs) has also published its final report on Big Data analysing its impact on consumers and financial firms.
ESAs report found that the development of big data does pose ‘some potential risks’ to financial services consumers, the benefits currently outweigh the bad. The report concludes that Big Data brings many benefits for the financial industry and consumers, such as more tailored products and services, improved fraud analytics, or enhanced efficiency of organisational internal procedures.
However, consumers should be made particularly aware of some of the risks posed by Big Data. These risks include the potential for errors in Big Data tools, which may lead to incorrect decisions being taken by financial service providers. Additionally, the increasing level of segmentation of customers, enabled by Big Data, may potentially influence the access and availability of certain financial services or product according to the report.
It e concluded that any legislative intervention at this point would be premature, considering that the existing legislation should mitigate many of the risks identified.
Copyright © 2018 RegTech Analyst
Copyright © 2018 RegTech Analyst
