The European Central Bank (ECB) has published a speech given by Sabine Lautenschlager, Vice-Chair of the ECB’s Supervisory Board, on fintech companies and the future of banking.

In her speech Ms Lautenschlager states:

“There is a chance that fintechs will deeply transform the banking business. It is up to the regulators and supervisors to ensure that this does not come at the cost of stability. The issue is, of course, that fintechs often operate outside the regulated banking sector. With that in mind, policymakers should follow the general principle of ‘same business, same risks, same rules’. That is important.”

At the end of her speech Ms Lautenschlager states that the ECB is working on a number of projects, including:

  • bank licences. The ECB is seeing a rising number of applications related to fintechs. In response to this, the ECB has teamed up with national supervisors to work on a joint policy approach. The policy will ensure that applications are treated in the same manner across the entire euro area;
  • authorisation process. The ECB is seeing more and more national supervisors exploring and setting up mechanisms to facilitate the authorisation process for fintech banks. Innovation hubs and sandboxes are two of the key words here and the ECB is seeking to implement a euro area-wide hub for fintechs;
  • outsourcing risks. The ECB is assessing the risks that might arise when banks or fintechs outsource data or even entire IT systems. The ECB already carried out some work in this regard – in 2015 it did a cybercrime survey, which was a unique global project. As a follow-up the ECB implemented a data base to track and analyse cyber incidents in large euro area banks; and
  • bank business models. The ECB will explore potential risks that emanate from fintechs and other non-bank competitors. In that regard, fintechs are among the ECB’s supervisory priorities.

View ECB speech on FinTech and the future of banking, 27 March 2017