European Banking Authority fintech roadmap

Less than a week after the European Commission released its fintech action plan, the European Banking Authority has published its own fintech roadmap. The EBA’s plan sets out its priorities in fintech over the next couple of years.

Why has the EBA published a fintech roadmap?
  • The EBA is required to monitor financial innovation. In the last few years it has issued recommendations, opinions, consumer warnings and other publications on specific fintech-related topics such as robo-advice and ICOs. Now the EBA is turning its attention to the fintech sector as a whole.
  • Last year the EBA surveyed EU regulators and used the results to inform a discussion paper on fintech. This roadmap picks up on the priority policy areas proposed in that paper.
What has the EBA announced?
  • The EBA will set up a fintech knowledge hub to bring together regulators, technology providers, market incumbents and fintech firms to share information and fill a perceived knowledge gap. The hub will interact with similar initiatives across the EU, including the Commission’s fintech lab.
What else does the EBA plan to do?
  • Monitor the regulatory perimeter: This includes looking at the nature of the services being provided, mapping the authorisation approaches of regulators and assessing whether the existing licensing process should be adjusted for fintech firms.
  • Analyse regulatory sandboxes and innovation hubs: The EBA has already identified considerable variation in such schemes across the EU and has now been tasked by the Commission to report on best practice by the end of 2018. There are no plans in the roadmap for exploring an EU-wide sandbox or developing the FCA’s proposal for a global sandbox.
  • Assess prudential risks: The EBA will refine its monitoring of the impact of fintech on the banking sector. The initial output will be thematic reports to be published this year identifying trends relating to the business changes caused by fintech.
  • Test cybersecurity: As well as producing guidelines for evaluating ICT risk, the EBA will produce guidance for regulators to assess the management of cybersecurity risks and consider developing a framework for testing cyber resilience.
  • Address consumer protection issues: The EBA will assess conduct of business requirements applicable to fintechs, including pre-contract disclosures.
  • Identify anti-money laundering risks: The EBA has already begun a fact-finding exercise to assess the money-laundering and terrorist financing risks associated with innovative fintech.
What else has the EBA said?
  • Ahead of the roadmap’s launch, the chair of the EBA, Andrea Enria, gave a speech in which he described the EBA’s pragmatic approach for fintech. The objective is to deliver “same risk – same rules” outcomes.
  • Mr Enria is “yet to be convinced” that cryptocurrencies should come under the full scope of regulation, a move that would take many years to develop in any event. More realistic in the short term would be to prevent banks and other financial institutions from holding or selling cryptocurrencies rather than regulating digital assets themselves.
  • According to Mr Enria, regulators and supervisors should be aware of any inadvertent bias for the status quo and actively take steps to avoid impeding the emergence of new technology and new entrants.