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Conclusions: Hitting several birds with one stone
While there is growing awareness of the potential of financial technologies for achieving many European policy objectives, doing so requires vision in conjunction with appropriate and focused policy action.
There is evident commercial potential in innovations such as the employment of big data for risk analytics, mobile and online payments technology, the use of distributed ledger (blockchain) to promote transaction efficiency, or the development of alternative funding platforms for small- and medium-sized enterprises. These opportunities are immense. At the same time there is a danger of getting carried away by the excitement surrounding FinTech. One can see parallels with the first big wave of usage on the internet in the late 1990s and the dot.com bubble. While financial technologies will profoundly change payments, credit markets and other banking and financial services, it is impossible to predict exactly which particular technologies will succeed.
The key to exploiting the opportunities of FinTech for improving the functioning of financial markets is therefore cooperation. This is Europe’s strength and why Europe can still be the global leader in financial technologies.
There are two key challenges. The first is ensuring common European policies in priority areas where the application of information and communications technologies can overcome barriers to the single market in financial services (three – digital supply chain finance, e-commerce and mobile payments – are highlighted here, but others may also merit attention). The second challenge then is making vigorous efforts to promote and enforce the underpinning of technological and data standardisation, across the industry, including the use by public-sector bodies to achieve critical mass, so that the opportunities of financial technologies can be fully exploited.
These two steps will go a long way towards the creation of borderless European financial markets, as open as possible to all participants and as effective as possible in the sharing of risk and the allocation of savings to the most productive possible purposes.