Are there alternative technological solutions to distributed ledger technology with similar benefits? How can regulators supervise the use of artificial intelligence? What should the EU's approach to 'sandboxes' be? These are some of the questions the European Commission is hoping to find answers to with a consultation on financial technology, which was launched on 23 March alongside its consumer finance action plan.

Rapid innovation

New technologies are increasingly shaking up the financial sector and radically transforming the way people access financial services. Over the past few years, there have been major developments around the world in technology-enabled financial services and innovation – or FinTech – and many countries and cities in the EU are seeing significant investment in this area. The European Commission recognises that if the EU is to remain competitive, it needs an environment open to rapid innovation so that Europe can benefit from the opportunities financial technology offers.

Technological innovation in finance ''brings huge opportunities for consumers and for industry, both by established players and new FinTech firms,'' says Vice-President Valdis Dombrovskis, responsible for Financial Stability, Financial Services and Capital Markets Union. Crowdfunding, peer-to-peer lending and mobile apps for making payments for example, are all facilitated or made possible by FinTech. But financial technology also brings with it a number of challenges and potential risks, for instance privacy and data management, cybersecurity, data standardisation and access to technology.

Seeking feedback

The consultation is part of a policy direction that has put technological innovation at the heart of recent EU legislation, for example in the field of payments. A number of measures launched in the context of the Capital Markets Union or the action plan on retail financial services have covered questions emerging from the digital transformation of finance. In parallel, the Call for Evidence that was launched at the end of 2015, has indicated elements of EU regulation that may not yet be conducive to technological development.

With the consultation, the Commission is looking for input from stakeholders on the impact that new technologies are having on the European financial services sector. ''We have some answers,'' Vice-President Dombrovskis said, ''but we also want to find out whether we are asking all the right questions to pursue a truly digital single financial services market". The feedback will help the Commission assess how well-adapted current regulation is to the changing technological landscape and contribute to its future strategy for FinTech in the EU single market.   

The consultation runs until 15 June 2017.