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ESBG releases position on EU Commission FinTech Action Plan

ESBG releases position on EU Commission FinTech Action Plan


​​​​Says crowdfunding, peer-to-peer lending should abide by same legislative measures as banks

>> Read: ESBG response to FinTech Action Plan

BRUSSELS, 25 June 2018 – A level playing field should be applied for crowdfunding and peer-to-peer lending platforms, savings and retail banks association ESBG said today.

In its response​ to the recently released EU Commission Fintech Action Plan, the Brussels-based association ​outlined potential areas of harmonisation needed include crowdfunding platforms' disclosure requirements, registration requirements, risk management and consumer/investor protection rules. ESBG recently submitted those points in a response to the associated Commission-managed “Have Your Say" process.

On the EU blockchain initiative, which stems from the FinTech Action Plan, ESBG hopes that the efforts will contribute to know-how building on not only on the regulators' side but also for the financial industry. Relatedly, ESBG notes that there is need for the Commission's work on initial coin offerings and crypto assets to show two-fold results. Investors should benefit from an equally high level of protection while a regulatory level playing field should be ensured​.

Cybersecurity: Refrain from weaving in proportionality

Regarding cybersecurity, policymakers should refrain from applying the proportionality principle. They argue to scupper the principle because cyber-attacks occur within an interconnected system that is only as strong as its weakest link. Digital skills are important in this respect, an area where ESBG offers views and member experiences in its full response. The association's response also states a need for a “European Centre for Cyber Security in Banking and Finance", similar to an EU-supported centre established for aviation called the European Centre for Cybersecurity in Aviation (ECCSA).

Representing 939 locally focused banks in the European Union, ESBG notes that a coordinated EU approach toward artificial intelligence (AI) was rightly included in the latest EU Commission communication on AI. It argues that no specific regulation should exist applying to financial institutions with respect to AI or machine learning. Such a rule could be unfairly harmful for the financial services industry, requiring players in that sector to meet stricter requirements than other industries for the use of the same technology. Building out innovation hubs / sandboxes is needed at EU level. 

​​Sent to its stakeholders, the paper is part of an overall efforts to provide policymakers with useful information from savings and retail banks who serve a third of the EU retail banking market. Relatedly, the association issued support letters for five candidates from ESBG's membership to participate in a commission expert group to review the fitness of the EU financial services regulatory framework. The Commission selected one of the ESBG-backed candidates.

FinTech Action Plan: EU legislative process so far

The European Parliament has asked the European Commission to act by virtue of the assembly's own-initiative reports, the most notable of which is titled “Report on FinTech: the influence of technology on the future of the financial sector" prepared by the ECON Committee and adopted at the plenary sitting on 28 April 2017. The Council has done virtually the same by stating that there is a sense of urgency to address emerging trends, such as blockchain and ICOs, in its conclusions adopted on 19 October 2017.

​Based on this, the Commission published its FinTech Action Plan on 8 March 2018. The Action Plan addresses several topics, among them planned steps to remove obstacles in implementing FinTech solutions. Other topics include a concrete proposal on crowdfunding and actions on blockchain, ICOs, the development of APIs compliant with both GDPR and PSD2 and cybersecurity.


>> Read: ESBG response to FinTech Action Plan

Financial supervision; Digitalisation; Innovation Hub; Innovation