Digitalisation of the financial sector is progressing rapidly, and European regulators are working hard to pave the way for it. Decision-makers want to promote digitalisation across the entire EU while keeping its various risks in mind. The Finnish financial sector views EU-level rules as a very welcome addition, emphasising that the new rules should be equal and long-lasting.
The Commission plans to publish a new action plan on financial technology (FinTech) this autumn and has been hearing the financial sector and other stakeholders through extensive consultations.
”For the Finnish financial sector it is important that new market players and emerging business models have the same regulation and supervision as the more traditional companies”, says Eeva Lahikainen, head of EU regulatory affairs at Finance Finland (FFI).
Legislation must support digitalisation
When new rules are made, their aim should be to set general principles rather than detailed stipulations based on the current state. If regulation is excessively detailed, it can quickly become obsolete as technology progresses. Principle-based regulation is more adaptable in this respect.
Regulatory obstacles of digitalisation should be an important area of focus in the future action plan. For example, EU data protection has some obstacles for the utilisation and training of AI and the development of related services, and cloud services are usable only to a limited degree at the moment due to local, unharmonised regulatory requirements.
Documents provided to financial services customers should be digital by default. Legislation requires that customers are provided standardised information on the financial product being sold. At present, some of these documents still default to paper, and they can optionally be delivered digitally if certain conditions are fulfilled, but this should be the other way around. Processing paper documents is more laborious and environmentally irresponsible. “In Finland, digitalisation has progressed further than most of Europe, so we should keep promoting digitalisation internationally”, Lahikainen notes.
Data sharing beyond financial data
The Commission plans to open the data gathered from financial services customers beyond the financial sector. The first steps in this direction were taken when PSD2 entered into force, requiring banks to grant third-party service providers access to their customers’ bank accounts if the customers so desired. This enabled new types of payment services. In Finland, for example, customers can now manage multiple payment accounts in multiple banks through one service.
There are more plans for this kind of data access in the future. “It is crucial that data is shared only voluntarily and with reciprocity. Sharing other than financial sector data is worth considering too. It can also help the development of financial sector services”, Lahikainen comments.
Customer consent and the respect for privacy must be the starting point for all data sharing also in the future.