The importance of ‘fintech’ regulation, a consequence of digital transformation, does not understand borders: in Europe, both the European Commission and the European Banking Authority (EBA) published their action plans in mid-2018, setting a roadmap until mid-2019.
For its part, the US Treasury It produced a report of more than 200 pages on non-bank financing, ‘fintech’ and innovation. Also in Mexico there have been important developments, when a comprehensive financial technology law (known as the ‘fintech’ law) has been passed, which aims to take advantage of the opportunities offered by digitalization to advance in terms of financial inclusion.
Although these reports or laws have completely different contexts and situations, some denominators common to all of them can be established, as detailed in BBVA Research’s report:
- Identification of measures to favor the development of new business models by appropriately controlling the risks. An example, the environment of cryptoactives. Already at the beginning of 2019 some fruits of this work have been seen in Europe. For example, in parallel with the publication of the Action Plan, the Commission presented a legislative proposal to regulate crowdfunding in the EU.
- Identification and elimination of barriers to the adoption of innovative technologies in the financial sector, such as cloud computing or artificial intelligence.
- The implementation of schemes to facilitate innovation (the ‘sandboxes’ regulatory and ‘hubs’ innovation). Recently, the European Supervisory Authorities have published a report advising the Commission on relevant aspects in relation to the regulatory sandboxes.
The great challenges
“The challenge has also spread to international authorities, who will have to find a way to cooperate and coordinate to respond to the challenges of digitalization. Luckily, there are several global regulators that have indicated this need in the last months of 2018, “says Lucía Pacheco, an economist at BBVA Research.
In fact, during the last two years several challenges have been identified that constitute the great challenges of the future, and that will continue on the agenda of the financial sector and the authorities.
In the area of payments, the great milestone of 2018 has been the entry into force of the new Payment Services Directive (PSD2), which seeks to encourage competition and strengthen the security of payments in Europe.
For this, it regulates access to customer payment accounts by third parties, which may offer information aggregation services and initiate payments. During the year the authorities have continued to work on defining the technical details.
Regulations on access, use and protection of data. During the last year, the value of the data has been constituted as a strategic asset in the digital economy. This causes attractive value propositions to be created for customers, but in turn increases privacy concerns. In Europe, this has materialized in two regulations: the general data protection regulation (GDPR), which came into force in May 2018, and the e-Privacy regulation, still under discussion.
The concern for privacy has also intensified in other geographies, such as the USA. UU., Where some states have already begun to update their regulations in this regard. In parallel, the open banking regulations have been extended, similar to the aforementioned PSD2, as in the case of Mexico. In the recently approved Fintech Law accessibility and the right to portability of data are regulated.
During the last year, the value of the data has been constituted as a strategic asset in the digital economy.
This causes attractive value propositions to be created for customers, but in turn increases privacy concerns. In Europe, this has materialized in two regulations: the general data protection regulation (GDPR), which came into force in May 2018, and the e-Privacy regulation, still under discussion.
The concern for privacy has also intensified in other geographies, such as the USA. UU., Where some states have already begun to update their regulations in this regard. In parallel, the open banking regulations have been extended, similar to the aforementioned PSD2, as in the case of Mexico.
In the recently approved Fintech Law accessibility and the right to portability of data are regulated. Cybersecurity: the increase in the frequency and sophistication of cyber attacks explains why in 2018 work continued on improving harmonization and international cooperation.
Cybersecurity was placed at the center of the agenda of the European Commission and the European Central Bank in 2018.
The increase in frequency and sophistication of cyber attacks explains why in 2018 work continued to improve harmonization and international cooperation. Cybersecurity was placed at the center of the agenda of the European Commission and the European Central Bank in 2018. Competition in the era of bigtech companies.
During 2018 the public debate on the role of large technology companies in the digital economy and in the financial sector. In Europe, the Commission presented a proposal for a regulation to delimit some of its obligations in its role as online services intermediation platforms in terms of transparency and equity. It is expected that this trend will continue in 2019.
The importance of ‘fintech’ regulation, a consequence of digital transformation, does not understand borders: in Europe, both the European Commission and the European Banking Authority (EBA) published their action plans in mid-2018, setting a roadmap until mid-2019. For its part, the US Treasury It produced a report of more than 200 pages on non-bank financing, ‘fintech’ and innovation.
Also in Mexico there have been important developments, when a comprehensive financial technology law (known as the ‘fintech’ law) has been passed, which aims to take advantage of the opportunities offered by digitalization to advance in terms of financial inclusion.