On Friday, the European Union’s (EU) banking regulator set out a plan or “roadmap” to help close the gaps in the regulation of the fast changing and ever evolving financial technology sector. He also urged people to take caution when dealing with cryptocurrencies.
The new EU rules which took effect on January provide an easier means for startups to offer traditional banking services such as modes of payment.
According to the head of the European Banking Authority, Andrea Enria, the banking regulator will examine the nature of services provided by FinTech companies “with a view to ensuring that similar services, entailing compatible risks, are regulated in a consistent way across the EU.”
The EU’s watchdog, or banking regulator, will help flesh out banking rules for the bloc and provide an assessment report by the end of the year.
Regulators have, for several years, held back on introducing comprehensive rules for FinTech for the reason that the sector is still too young compared to mainstream banking. Politicians are also determined not to suppress innovation as Berlin, London, and Paris move towards attracting FinTech firms.
Enria stated that EBA will be seriously evaluating regulatory “sandboxes” or controlled environments set up by national regulators to enable FinTech firms to try out new apps for their customers.
In a speech at the Copenhagen Business School, Enria expressed the need to ensure that firms can participate in the internal market for financial services on an equal footing and at the same time maintain a high standard of protection for consumers.
Brussels made its first attempt into FinTech regulation last week by suggesting an “optional” system to license crowdfunding.
Enria believes that bringing FinTech firms under the same umbrella as banks simply because they compete in certain similar sectors is not a good idea.
However, it is important to increase measures in monitoring links between banks and FinTech companies, which sometimes develop new services together.