José Manuel Campa's introductory remarks at the 2020 EBA Policy Research Workshop "New technologies in the banking sector – impacts, risks a

13 November 2020

This year the Workshop focusses on the application of new technologies in the banking sector and the impacts, opportunities and risks. This is timely.

These are annual events intended to bring together economists and researchers from supervisory authorities and central banks as well as leading academics to discuss how the banking sector is evolving and challenges from a regulatory and supervisory perspective and always generate rich discussion.
This year the event is hosted for the first time via an online format, a format which offers the considerable advantage of enabling many more of you to join us from across the EU than if the event had been taking place in the traditional manner.


This year the Workshop focusses on the application of new technologies in the banking sector and the impacts, opportunities and risks. This is timely. First, because we are witnessing a significant increase in experimentation and roll-out of new technologies across the EU financial sector, a trend accelerated in the context of the COVID-19 crisis. Second, because I think we are only at the cusp of what will be a period of immense technology-enabled change, not only in terms of the way in which customers access and engage financial services and institutions’ compliance and other operational processes, but also the struture and functioning of the financial sector. Indeed, it is for these reasons that FinTech is one of the EBA’s areas of strategic policy work in 2020 and for the coming years.


Let me reflect on these points in turn.


Banks and other financial sector participants are increasingly leveraging new technologies to change and enhance the way in which customers access financial services. In particular, financial institutions have for some time been investing in mobile and online banking platforms and new systems for remote customer onboarding, both of which have been leveraged throughout the COVID-19 crisis as customers across the EU are increasingly turning to digital solutions to access financial services and make cashless payments.
In terms of operations and processes, financial institutions are leverging AI, cloud and RegTech solutions to streamline systems and generate cost savings, for example in the context of credit scoring, customer onboarding, suspicious transactions monitoring and reporting. And we see DLT and digital tokens increasingly being used in the context of, for example, trade finance, bond issuance and payments.


Importantly innovative technologies are also being engaged to facilitate new business models. On the one hand further enabling the disintermediation of financial services by supporting the entry of new firms in the banking and payments sectors, for example crypto-asset service providers. On the other, enabling the reaggregation of financial services, for instance through the use of digital platforms bridging traditional financial market participants and, for example, so-called BigTechs.


I know Carolyn will provide her perspectives on the opportunities and risks presented so I will not elaborate. Instead let me draw attention to the EBA’s FinTech Knowledge Hub1 which has been established to bring together competent authorities in a common setting to enhance engagement with incumbent and new entrant institutions and other FinTech firms about innovative technologies.


The objectives are to enhance our financial innovation monitoring capacity, to promote knowledge sharing about opportunities and risks presented, and to foster technological neutrality in regulatory and supervisory approaches.


Why are these things important?


First, we need to keep pace with market developments to understand on a timely basis opportunities and risks arising from innovative technologies and, where appropriate, to repond with changes to our regulatory and supervisory approaches to remove inadvertent barriers to applications of these technologies in the financial sector and to mitigate effectively any risks arising.


Second, we need to promote a common approach across the EU to the acceptance, regulation and supervision of applications of innovative technologies. This is vital when we think of incumbents seeking to use the same RegTech solution across a group, or for firms seeking to scale up their products or services cross-border. And for many firms we need not only common standards at the EU level, but also international level, hence the EBA’s proactive engagement in international policy work streams relating to FinTech, for instance in the setting of the Basel Committee on Banking Supervision and the Financial Action Task Force.


Third, we need to find solutions that are forward-looking and meet our stated policy of achieving technology neutral in regulatory and supervisory practices.....

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