Emerging Financial Technology (Fintech) has a, seemingly endless, potential to drive efficiency gains and the disintermediation of financial services, thereby bringing about decreased transaction costs. Keeping in mind that Fintech so far remains relatively unchartered territory, regulatory measures and their effects on the future development of the industry make for heated discussions. Currently, as stated by White & Case`s Willem Van de Wiele in a recent article, the regulatory framework for this emerging technology remains a patchwork of various national regulations. With the publication of the EC`s awaited Action Plan on Fintech expected this spring, the industry is looking for answers as to what to expect.
Suggestions are to be found in the Draft Action Plan. The Draft emphasizes coordination and cooperation between regulators and market participants, establishing that the goal of the Action Plan is twofold: (1) to harness rapid advances in technology to the benefit of the EU economy, industry and citizens, and (2) to foster a more competitive and innovative European Financial sector. This aligns with an EC consultation on Fintech published earlier, outlining the EC`s three core principles on innovation and Fintech: technological neutrality, proportionality and market integrity.
Europe is currently lagging behind with respect to the development of Fintech, compared to major players in Asia and the USA. The looming Brexit and the resulting uncertainties, with London being a hub for Fintech start-up companies, could also contribute to the further hampering of the European Fintech industry. Predictability is important for any emerging industry, and with current debates on the different usage and challenges of Fintech raging, the EC`s Action Plan cannot come soon enough.