In view of the policy debate on Fintechs, the EFR has issued a policy note outlining some of the challenges that require a permanent interaction between policymakers and industry players so that the former can monitor the technological and business developments and understand the risks and opportunities involved. the policy note contains also some recommendations.
Three different types of providers take part in the Fintech ecosystem: financial institutions, start-ups and large technological companies, who themselves are digitising and innovating the way they deliver products and services for their customers. They are not only competing amongst themselves, but they are also increasingly collaborating.
The application of new technologies can increase efficiency in existing processes and activities. It allows firms to better address individual customer needs and help people take better financial decisions. And it can reduce operating costs and improve access to financial services. It is also important to note that these technologies have lowered the barriers to entry to a number of financial services activities. This increased competition is a stimulus for all players to offer greater value to customers.
The digitalisation of financial services is also an opportunity to strengthen the EU single market, With the help of the regulatory framework, the Fintech transformation can help to overcome the existing EU market fragmentation and further increase choice for European consumers.