Verbatim report of proceedings

Tuesday, 16 May 2017 - Strasbourg

FinTech: the influence of technology on the future of the financial sector (debate)

  Cora van Nieuwenhuizen, rapporteur. – Mr President, new technologies are rapidly changing the nature of the financial infrastructure around the globe. This presents massive opportunities for Europe and it is now up to us, the policymakers, to make the right choices and create a conducive environment so that Europe can benefit to the full extent.

FinTech is often used to refer to a specific scenario of start—ups disrupting finance with innovation. This definition is not the one used in our report because it would exclude a large number of relevant actors. Instead FinTech may be understood as finance enabled by new technologies covering the whole range of financial services, products and infrastructure. It also includes InsureTech, the use of new technologies in insurance, and RegTech, the application of new technologies for regulatory compliance.

The current rise of FinTech comes after the origination of a number of different technological developments within a short time span, namely artificial intelligence, cloud computing and distributed ledger technology. These provide new opportunities for disruptions like mobile payments, open banking, crowdfunding, crypto currencies and robo advice. FinTech can lead to significant benefits such as cost reductions, efficiency gains, and more transparency. It can also be an effective tool for financial inclusion, opening up high—level services for those who could not afford them before. Furthermore, FinTech can enable cross—border financial flows and infrastructure through alternative lending and investment channels.

The FinTech revolution that we are currently experiencing is global. In recent years, global FinTech investments have soared. The bulk of these investments was made in the United States, and Asia and Israel are also gearing up in this respect. The US, China and Israel host more than half of the top ten largest FinTech companies. If Europe wants to remain competitive, rapid innovation should be the norm, not the exception. This is not only important for Europe’s financial infrastructure, but also for the real economy, with consumers and businesses benefiting from improved financial services.

Notwithstanding all the benefits, FinTech also confronts us with essential questions of a regulatory, societal nature. Consumer protection and the stability of the financial system should be key concerns in this regard. Together with the competitiveness of the European economy, they make for the core priorities of this report. The report does not intend to give technical solutions. However, it does intend to pose the right questions. That should be a first step in the process of creating a forward—looking European policy in the area of financial technologies.

The intention of this report is not to propose specific legislative actions. We must be cautious with creating new rules because much is still unclear about future developments of financial technologies. A better point of departure is investigating where current legislation causes uncertainties or barriers and identifying where additional action is necessary. Doing this purposefully requires a holistic approach, as technological developments in our digitising society call for breaking silos. FinTech actors are already breaking silos themselves. They often offer products in a diverse multi-party conjunction.

I have some minutes left at the end and will use the time then. I am sure that a lot of the things that I want to say will be said by my colleagues, the shadow rapporteurs.