On 29 October 2019, the European Banking Authority (EBA) published a report identifying the potential impediments to the cross-border provision of banking and payment services, alongside a set of related FAQs.

The report was developed under the EBA’s March 2018 Fintech Roadmap as part of its efforts to monitor the use of digital solutions (such as online and mobile banking applications and platforms in the banking and payments sectors). These solutions enable financial institutions to reach a wider population of customers, including cross-border. However, the cross-border provision of financial services remains limited due to complex reasons relating to both supply and demand of financial services.

In the report, the EBA outlines two important challenges in removing barriers to market entry and improving the competitiveness of the EU single market. The first challenge is the identification of when a digital activity is to be regarded as a cross-border provision of services. The second challenge stems from areas of EU law that are not fully harmonised or areas that are not yet covered by EU law. In the report the EBA focuses on the areas of authorisations and licensing, consumer protection and conduct of business requirements, and anti-money laundering (AML) and countering the financing of terrorism (CFT). If these issues remain unaddressed there is a potential likelihood of impediments to financial institutions and other FinTech firms from providing cross-border banking and payment services within the EU.

To counteract this, the EBA recommends that the European Commission takes action through updating its interpretative communications to support the identification of cross-border services, taking into account the digitisation of financial services and the development of legislative proposals to further harmonise requirements relating to consumer protection, conduct of business and AML/CFT.