The European Banking Authority (EBA) published the first products of its FinTech Roadmap, namely a thematic report on the impact of FinTech on incumbent credit institutions' business models and a thematic report on the prudential risks and opportunities arising for institutions from FinTech.
Both reports fall under the wider context of the newly established EBA FinTech Knowledge Hub and aim to raise awareness within the supervisory community and the industry on potential prudential risks and opportunities from current and potential FinTech applications and understand the main trends that could impact incumbents' business models and pose potential challenges to their sustainability.
Report on the impact of FinTech on incumbent credit institutions' business models
The report sets out five factors that might significantly affect incumbents' business models from a sustainability perspective:
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digitalisation/innovation strategies pursued to keep up with the fast-changing environment,
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challenges arising from legacy ICT systems,
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operational capacity to implement the necessary changes,
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concerns over retaining and attracting staff and
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increasing risk of competition from peers and other entities.
The report concurs that currently the predominant type of relationship between incumbents and FinTech is partnership with FinTech firms, which is considered a "win-win" situation.
Report on the prudential risks and opportunities arising for institutions from FinTech
The report assesses seven use cases, where new technologies are applied or considered to be applied to existing financial processes, procedures and services. The report aims to provide both competent authorities and institutions with useful guidance on such applications. It focuses on micro-prudential aspects, setting out potential prudential risks and opportunities that may arise from each use case.
Press release
Report on prudential risks and opportunities arising for institutions from_FinTech
Report on the impact of_Fintech on incumbent credit institutions' business models
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