Financial Innovation and FinTech

The EBA’s work on FinTech and Financial Innovation has evolved over recent years in line with the proliferation of technology in the banking sector. Consistent with the EBA's statutory objectives and duty to monitor financial innovation, the EBA developed the 2018 FinTech Roadmap, established the FinTech Knowledge Hub and set out the EBA’s FinTech priorities until 2020.  

The EBA’s current and future FinTech priorities include a range of actions to support the scaling of innovative technology cross-border whilst ensuring high standards of financial sector operational resilience and consumer protection in line with the European Commission’s Digital Finance Strategy (DFS) published on 24 September 2020. The main objectives of the DFS are to: 1. tackle fragmentation in the Digital Single Market for financial services, 2. ensure that the EU regulatory framework facilitates digital innovation in the interest of consumers and market efficiency; 3. create a European financial data space to promote data-driven innovation; and 4. address new challenges and risks associated with the digital transformation. The DFS sets out significant new roles and mandates for the EBA including in relation to: 

  • artificial intelligence,  
  • digital identities,  
  • RegTech and SupTech, and  
  • on the suitability of the EU’s regulatory and supervisory framework. 

The DFS is accompanied by legislative proposals for markets in crypto-assets (MiCA) and digital operational resilience (DORA), which include a number of mandates for the ESAs to support the development of EU regulatory frameworks in the areas of crypto-assets and ICT and security risk management respectively. Specifically, MiCA proposes the establishment of an EU framework for the regulation of specified activities involving crypto-assets that are not already covered by EU law (namely issuance of crypto-assets; custody and administration of crypto-assets; operation of crypto-asset trading platforms and exchanges (to fiat or other crypto)). To this end, MiCA proposes several important new policy mandates and supervision functions for the EBA for issuers of ‘significant asset-backed crypto-assets’. 

Meanwhile, DORA aims to put in place a comprehensive framework on digital operational resilience for EU financial entities and to consolidate and upgrade the ICT risk requirements that have so far been spread over the financial services legislation. DORA proposes new policy mandates for the EBA in ICT risk management, incident reporting, digital operational resilience testing, measures for a sound management by financial entities of the ICT third-party risk as well as a new ESA oversight role over critical ICT third party providers.  

The proposals build on the work carried out under the March 2018 EC FinTech Action Plan, the EBA’s FinTech Roadmap, and advice of the EBA and other ESAs, and set out a wide range of potential new tasks for the EBA. The proposals, if agreed, will facilitate the scaling up of technology-enabled financial services cross-border whilst ensuring effective risk mitigation for consumers and financial stability in line with the principle of technological neutrality.