The European Banking Authority (EBA) published today its response to the European Commission’s consultation on a new Digital Finance Strategy for Europe. The EBA is committed to securing technology neutrality in regulatory and supervisory approaches and strongly supports the Commission’s initiative towards a new Digital Finance Strategy. The EBA identifies in its response a wide range of possible EU-level actions to support the scaling of innovative technology cross-border whilst ensuring high standards of consumer protection and financial sector resilience. The EBA looks forward to the publication of the Digital Finance Strategy and stands ready to play its role in optimising the EU Single Market for digital finance.

The EBA highlights in its response the importance of technological neutrality in regulatory and supervisory approaches as a means to facilitate innovation in the financial sector and support scaling cross-border. This requires comprehensive and ongoing monitoring of the application of innovative technologies to enable the timely identification of opportunities and risks and adjustments as appropriate to regulatory and supervisory approaches.

In this context, the EBA supports proposed enhancements to coordination mechanisms, such as the EBA’s FinTech Knowledge Hub and the European Forum for Innovation Facilitators (EFIF), to facilitate a stronger dialogue between industry and regulatory and supervisory authorities on innovation-related issues.

The EBA also supports the European Commission’s proposed initiatives, and identifies additional actions, to:

• promote consumer financial education and digital and financial literacy;
• develop a high-level AI principle-based framework to serve as an appropriate foundation for the wider use of AI in the financial services;
• support the scaling of RegTech and SupTech initiatives and facilitate ‘machine readability’ and the standardisation of concepts, definitions and reporting obligations across EU financial services legislation;
• further harmonise customer due diligence (CDD) processes where possible and investigate potential models (including public and private sector and hybrid models) for efficient, robust and trusted digital identity verification.

Legal basis and background

The response has been prepared pursuant to Article 9(4) of the EBA's Founding Regulation, which mandates the Authority to establish a Committee on financial innovation ‘which brings together all relevant competent national and supervisory authorities with a view to achieving a coordinated approach to the regulatory and supervisory treatment of new or innovative financial activities and providing advice for the Authority to present to the European Parliament, Council and the European Commission'.

In April 2020, the European Commission published its consultation on a new Digital Finance Strategy for Europe/FinTech Action Plan. The consultation builds on the outcome of work carried out in accordance with the March 2018 FinTech Action Plan, including the actions undertaken by the EBA pursuant to its FinTech Roadmap.