With the EU set to take a detailed look at fintech in 2017, the European fintech sector should brace for change and increased regulation.
The European Commission has announced the establishment of a financial technology task force. The Financial Technology Task Force (FTTF) will be Co-chaired by DG FISMA and DG CONNECT and engage outside experts and stakeholders with the aim to formulate policy-oriented recommendations and propose measures for Fintech in 2017.
According to Roberto Viola, Director General DG Connect, “the task force aims to “help FinTech innovation reach its full potential with Europe playing a leading role while ensuring financial stability and consumer confidence”.
He continues, “The current transformation affects existing financial institutions, as well as the new players, such as fintech startups or large internet platforms. The challenge is both to lay down the right conditions to support innovation and for a future-proof environment to emerge.”
The EU financial services commissioner Valdis Dombrovskis said technological innovation in finance was a development to be encouraged, but also noted that there are risks to be addressed.
“It brings huge opportunities for consumers and for industry,” he said. “Our task force will help us make sure that our policy supports the pursuit of these opportunities while addressing any risks that may emerge.”
While the specific impacts of the EU Commission on fintech will be made clearer over the course of 2017, the European fintech sector should begin to prepare for change and increased regulation. For fintech startups to survive in a rapidly changing environment will require a very clear regulatory and compliance strategy. Founders will need to learn to cooperate with regulators and find strategic partnerships that help their businesses grow.
For the EU, the main challenge is to strike the right balance. Over-regulation will have dire impacts on the fintech sector. At the same time, under regulation could lead to exploitative activities and the loss of consumer trust.