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Both ambitious and comprehensive, the package builds on the work carried out in the context of the FinTech Action Plan of 2018 and the work of the European Parliament, European Supervisory Authorities (ESAs) and other experts, as well as on a series of consultations run during the last months by the European Commission with stakeholders to which ESBG contributed on several digital finance and payments topics.
Package provides a responsible innovation boost in pandemic times
With its new Digital Finance Package, the European Commission aims to boost responsible innovation in the EU financial sector by making rules in Europe safer and more digital friendly for consumers, especially for highly innovative digital start-ups, while mitigating any potential risks related to investor protection, money laundering and cyber-crime.
Taking action supports EU digital transition
ESBG supports overall the decision of the European Commission to take action with such a crucial package, which supports digital transition in the European Union, one of the main priorities of Von der Leyen Commission, particularly around the Recovery Plan. Relatedly, the pandemic has accelerated digital transformation and consumer expectations. Digital technologies prove particularly important for the recovery of European economic across different sectors, including financial services.
ESBG will monitor the reactions to the Digital Finance Package among stakeholders, while continuing to represent the views of its members and contributing active to the debates that follow and to further policy developments.
i. A Digital Finance Strategy: Aimed to make Europe’s financial services more digital friendly, the strategy also seeks to ensure a level playing field among providers of financial services, be they traditional banks or technology companies: same activity, same risks, same rules, a principle of crucial importance also for ESBG. A new FinTech action plan, the Digital Finance Strategy sets the priorities for key policy development in the field, building on extensive consultations with relevant stakeholders. ESBG had highlighted main obstacles to a full deployment of the potential of innovative technologies in the European financial sector: 1) Regulatory fragmentation; 2) Unlevel playing field; 3) EU global competitiveness; 4) Lack of digital skills. Also, ESBG had recommended EU regulators prioritise the following initiatives:
• Strengthening a European digital payment solution.
• Adapting European competition law to the reality of the digital economy, characterised by powerful digital companies (especially from the United States and China).
• Introducing rules to prevent large, vertically integrated platforms from discriminating against product and service provision by third parties.
• Investing in technological infrastructures enabling digital coverage and education, such as on digital tools, budget coaching, among others.
ii. A Retail Payments Strategy: In welcoming this strategy to bring safe, fast, and reliable payment services to European citizens and businesses, ESBG members are looking forward to collaborating with the Commission to further develop the European market for payments so that the European Union can fully benefit from innovation and the opportunities that come from digitalisation. The banking industry stands ready to support all the efforts aimed at reinforcing Europe’s sovereignty in payments. ESBG members also appreciate the focus on creating a level playing field and to ensure all actors providing services in the payments field will be subject to the principle “same risks, same rules”, current un-regulated entities included.
iii. New legislation on crypto-assets: Designed to boost innovation while preserving financial stability and protecting investors from risks, the ‘Regulation on Markets in Crypto Assets' (MiCA) will provide legal clarity and certainty for crypto-asset issuers and providers. Issuers of significant asset-backed crypto-assets – so-called global ‘stablecoins' – would be subject to more stringent requirements, such as in terms of capital, investor rights and supervision. These proposals respond to most of the ESBG priorities and if adopted will ensure a level playing field that has been one of ESBG main demands for the last years.
iv. Legislative proposals on digital operational resilience: Called the ‘Digital Operational Resilience Act' (DORA), aimed at closing the door to cyber-attacks and enhancing oversight of outsourced services. It seeks to ensure that all participants in the financial system have the necessary safeguards in place to mitigate cyber-attacks and other risks. In addition, DORA introduces new rules of the management of ICT third party risks, including providers such as cloud computing service providers. This is in line with the recommendation of ESBG expressed in the response to the operational resilience consultation as well as in the work resulting from the ESBG Cloud certification taskforce. DORA applies to 20 types of EU regulated financial entities. In line with what expressed by ESBG, DORA aims at preserving proportionality in operational resilience, for example dedicating a light regime for micro enterprises. Proportionality is not only applied according to the size of the company, as advanced digital testing only applies to significant firms, but also to the kind of ICT issues considered: Obligations of full ICT reporting only apply to major and serious ICT issues.
About ESBG
ESBG represents the locally focused European banking sector, helping savings and retail banks in 21 European countries strengthen their unique approach that focuses on providing service to local communities and boosting SMEs. An advocate for a proportionate approach to banking rules, ESBG unites at EU level some 885 banks, which together employ 656,000 people driven to innovate at 48,900 outlets. ESBG members have total assets of €5.3 trillion, provide €1 trillion in corporate loans, including to SMEs, and serve 150 million Europeans seeking retail banking services. ESBG members commit to further unleash the promise of sustainable, responsible 21st century banking.