EU launches new cooperation platform to better position itself as a global fintech hub
The European Commission and European Supervisory Authorities have just launched a new European Forum for Innovation Facilitators. The EFIF aims to improve EU cooperation around the regulation of new fintech solutions. More fundamentally, it is designed to help fintech companies scale their businesses across Europe and thus boost the EU’s competitiveness in attracting innovation.
What will the EFIF do?
The EFIF will be a network for national and EU authorities to collaborate on fintech. In his keynote speech launching the new forum, the Commission’s Vice-President Dombrovskis outlined three key functions:
- Sharing best practice: creating a network of national supervisors for exchanging best practice approaches to fintech
- Jointly addressing regulatory obstacles: enabling regulatory and supervisory obstacles to be identified early on and to be addressed more quickly at an EU level
- Enhancing capacity: allowing national authorities and European supervisors to enhance their capacity and share knowledge
An important milestone
Over the last year, the Commission has been working through a series of concrete steps outlined in its EU Fintech Action Plan to make the EU financial sector more innovative and competitive. The EFIF builds on this work and, in the words of Dombrovskis, “represents an important milestone for the EU to become a global Fintech hub”.
In his speech, Dombrovskis also took the opportunity to promote the use of innovation facilitators – i.e. regulatory sandboxes and innovation hubs. He pointed out that, whilst innovation hubs are now relatively common in the EU, there are only five operational regulatory sandboxes and he encouraged Member States that had not already done so to “take the step and set up a regulatory sandbox of their own”. This is notable, as some EU regulators have previously raised concerns about regulatory sandboxes.
EFIF vs GFIN
In the last few months we have also seen the launch of a similar cross-border regulator network, in the form of the Global Financial Innovation Network (GFIN). GFIN is an initiative that has been led by the UK’s FCA and includes 29 organisations including, for example, the financial regulators of Abu Dhabi, Dubai, Hong Kong and Singapore (although currently no representation from continental Europe). Much like EFIF, it aims to facilitate cross-border collaboration and knowledge sharing among regulators in order to facilitate cross-border scaling. Unlike EFIF, it has also taken the step of launching a cross-border testing environment in which firms can trial cross-border solutions.
Background to the EFIF
Earlier this year the European Supervisory Authorities published a joint report on regulatory sandboxes and innovation hubs. As well as setting out a comparative analysis on these innovation facilitators within the EU and best practices for developing and operating them, it laid out recommendations for fostering greater coordination and cooperation within the single market. The EFIF is a product of those recommendations.