EBF calls for fairer fintech regulations

Author: Ben Bschor | Published: 21 Sep 2015
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The European Banking Federation (EBF) is pushing for an alignment of regulatory requirements for traditional banks and fintech companies.

Ensuring fair competition and removing regulatory inconsistencies is among the key messages of its Blueprint for Digital Banking and Policy Change.

The document and website, launched last week to coincide with the EBF’s annual conference in Brussels, will be the basis for the advocacy group’s political activities on digital banking. Issue papers on strategic topics will follow.

Other aspects of digital banking covered in the blueprint include data protection, cyber security, big data, digital payments and blockchain technologies.

The document focuses on retail banking and aims to position banks as strategic players in the context of the European Commission’s digital single market (DSM) initiative. "Banks work hand-in-hand with technology firms," the paper states, denying that the industry was on the defensive in the digital space.

Speaking about this process, Teppo Paavola, chief development officer new digital businesses at BBVA, said the Spanish bank did not only aim at getting existing businesses online by adding a "digital front-end". BBVA was also working on developing new business models.

Other speakers at the conference highlighted the different approaches banks took to get a foothold in the rapidly evolving fintech sector, ranging from acquisitions and collaborations to the hiring of talent and in-house development.


  • The European Banking Federation says fintech companies offering bank-like services should adhere to regulations equivalent to those of traditional banks;
  • The group believes that disruptive technology start-ups introduced products with no regard for regulatory implications, while banks started their innovation process with regulatory compliance in mind. This had an impact on banks’ capacity to innovate
  • The views are part of the EBF’s new Blueprint for Digital Banking and Policy Change. The document covers a wide range of digital issues, including cybersecurity, blockchain technology, data protection and digital payments.
  • The paper will be the basis for the EBF’s lobbying activities around the EU’s digital single market initiative going forward, with issue papers on strategic topic to follow subsequently

The EBF concedes that non-traditional competitors push banks to rethink how they operate. But the paper also highlights repeatedly where it considers incumbents to be in a stronger position. Banks’ expertise in dealing with trust and security issues "potentially distinguishes the bank in the services it offers from the new entrants on to the market," the paper argues.

It also implies that new entrants might be less inclusive and, for instance, be less committed to serving elderly customers that are sometimes slower to adapt.

Moreover, the new fintech players had "no regard for regulatory implications" when launching disruptive new products, while traditional banks took compliance with regulations as the starting point. "Consequently, banks appear to face regulatory barriers limiting their innovative ambition, whereas new entrants to the market seem not to experience the same restrictions," according to the advocacy group.

The paper criticises so-called overlapping, conflicting and redundant regulation that has not yet "properly or fully addressed the development made possible by digitalisation". It warns that yet-to-be issued lower level 2 regulation could create new obstacles to developing digital services.

For instance, the payment services directive (PSD) stipulated that banks should give third party payment providers access to customer data information and client accounts in the context of authentication procedures. This conflicted with customer privacy and security requirements, the EBF argues.

The report called for a holistic approach to adjust EU regulations to digital market reality.

EBF chief executive Wim Mijs, who at the event presented a copy of the document to EU financial services commissioner Jonathan Hill, said the blueprint would be "the basis of our lobbying" in the field of digital banking going forward.

The EBF is the umbrella organisation of 32 national banking associations in Europe representing about 4,500 banks.

Look out for this month’s cover story, on the challenges of grabbling with cybercrime, facing both regulators and financial institutions

See also:

China begins internet finance clampdown

Institutional investors eye P2P lending platforms

Singapore regulator backs fintech solutions