European Commission presses on with fintech strategy, launching two new consultations

The European Commission has just launched two new consultations. One will inform a new five-year “Digital Finance Strategy” to follow its 2018 Fintech Action Plan. The other will contribute to the EU’s first “Retail Payments Strategy”. Both are likely to attract interest from incumbent and new financial players alike. They are open for input until 26 June 2020. 

Two new consultations

The European Commission is seeking input on its proposals for an EU-wide digital finance strategy and retail payments strategy. In the midst of the COVID-19 crisis, the Commission highlights that these come at a time when the need for well-regulated digital infrastructure is greater than ever. They follow recent consultations on crypto-assets and operational resilience, which have now closed for comment. 

Consultation on a digital finance strategy

This consultation is intended to contribute to a new Digital Finance Strategy / Fintech Action Plan for the next five years. According to the EC, all actions in its previous Fintech Action Plan have now been completed. Based on prior work, including the ROFIEG report, the Commission has identified four priority areas:

  • Ensuring the regulatory framework is fit for the digital age. For example, it is seeking views on how to ensure regulation is both technology-neutral and innovation-friendly and on the challenge of regulating a broadening range of firms (including fintechs and big techs).
  • Capitalising on the opportunities of the EU single market. It is particularly focused on how to reduce fragmentation, for the benefit of both firms and consumers.
  • Promoting a well-regulated data-driven financial sector. In this regard, it is seeking views on how best to build on both general cross-sector data regulation (e.g. GDPR) as well as sector-specific data-sharing initiatives such as open banking.
  • Enhancing the digital operational resilience of the EU financial system.

This new consultation invites input on the first three areas. The fourth area has been addressed by the consultation on operational resilience.

Consultation on a retail payments strategy

This consultation is intended to contribute to a new Retail Payments Strategy for the EU. This strategy is intended to ensure the EU’s policies towards payments are developed with a view to strengthening its influence and economic autonomy. For example, the Commission wants to create an environment in which European payment solutions can thrive and notes that this could “facilitate payments in euro between the EU and other jurisdictions and reduce EU dependency on global players, such as international card schemes, issuers of global ‘stablecoins’ and other big techs”.

It has outlined four key objectives:

  • Better pan-European payment solutions. The Commission’s goal is “fast, convenient, safe, affordable and transparent payment instruments, with pan-European reach and ‘same as domestic’ customer experience”. It is seeking views on how best to facilitate “instant” payments and digital identity solutions that work across the EU and on how to promote a diverse range of payment options (including cash).
  • An innovative and competitive retail payments market. In this regard, it is seeking evidence on how the European legislative framework for retail payments (including PSD2 and EMD2) has been working. It is also considering future payment solutions and asks whether and how it should facilitate “programmable money”.
  • Access to safe, efficient and interoperable retail payments systems and other support infrastructures. It seeks views on how to ensure European payment systems are fully interoperable and on creating a level playing field for bank and non-bank payment services providers in accessing payment systems, among other things.
  • Improved cross-border payments, including remittances. Finally, it wants to improve cross-border payments between the EU and other jurisdictions. It notes that reducing the costs of cross-border payments in euro should also contribute to enhancing the international role of the euro. 
Next steps

Both consultations are open for input until 26 June 2020. The final strategies are due to be published in Q3 2020.