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Fintech and the digital transformation of banking

FinTech is changing the financial sector. What are the challenges associated with this and what policies should we adopt in response?


Pēteris Zilgalvis

Head of Unit for Startups and Innovation in the Digital Single Market Directorate, European Commission, DG CONNECT,

Video and audio recording


Xavier Corman, CEO & Co-Founder of Ebedex, opened the event in describing the difficult situation that FinTechs are facing when operating in Europe. Various languages, several currencies, and especially different interpretations of the same European regulation hinder the expansion and impose costs. European FinTechs are structurally disadvantages compared to foreign competitors and thus often stay national. He demanded an adapted regulation that does not treat FinTechs and banks equally (principal of proportionality) and gives FinTechs a possibility to try out new technologies and business models (sandboxing). More harmonization of rules across Europe is needed as well as a more equal technical infrastructure, financial and technological education, and more funding has to be made available for FinTechs. In order to stay competitive, Europe has to digitalize its citizens, governments, and companies.

Ezequiel Szafir, CEO of the digital bank of Grupo Santander, requested a regulation based on the risk of the activity with an application of proportionally and sandboxing in a later step. Any mistrust between banks and FinTechs can be attributed to incomplete regulation as well as to improper cybersecurity measures by FinTechs. Investments of banks into FinTechs should be facilitated by allowing banks to ring-fence FinTechs activities. First of all, future regulation has to digitalize banks by enabling them “to go in the cloud”. With legacy IT systems still operating in its banks, Europe will not be able to maintain its competitive position.

Pēteris Zilgalvis, DG CONNECT at the European Commission, points out that the European Commission plans to make Europe the number one area for FinTechs. As examples of already taken action, Zilgalvis mentions the Blockchain initiative and cloud initiative by the European Commission. FinTechs will be supported by future regulation, but their cyber-security remains an important issue. The regulator will continue with a technology-neutral approach.

Cora van Nieuwenhuizen, MEP, stresses the “need for speed” as Europe begins to fall behind in technologies such as big data, artificial intelligence (AI), and machine learning. She points out that these technologies are without alternative but provide many new opportunities such as lower costs, higher speeds, and extended choice. As the rest of the world is already investing heavily, Europe has to keep up and change preconditions quickly to compete with the best talents. Europe has already lost the “war on software” (mayor software companies are non-European), but it may lose the “war on AI” as well if no changes will take place. Two old legacies, IT systems of banks and the financial crisis, are hindering an optimal development and have to be overcome.

Event notes by Alexander Roth.


Presentation by Xavier Corman