“European countries have opened 21 innovation hubs and 5 regulatory sandboxes to help companies roll out innovative services in the financial sector. And these initiatives are working very well. So the next step is to make this work equally well at the EU level.”

Valdis Dombrovskis
Valdis DombrovskisVice-President for the Euro and Social Dialogue, Financial Stability, Financial Services and Capital Markets Union

“We need to ensure that firms can enter and participate in the internal market for financial services on an equal footing and that a high standard of consumer protection is maintained.”

Andrea Enria
Andrea EnriaChairperson Single Supervisory Mechanism and former Chair of the European Banking Authority

“We are a long-time supporter of an EU-wide framework of experimentation, also know as a fintech sandbox. This will not only benefit the market knowledge of authorities but eventually accelerate the cross-border nature of fintech business cases.”

Wim Mijs
Wim MijsCEO European Banking Federation

Banks are seeking to test out new technologies, solutions and business models but are constrained by the existing regulatory framework which does not allow low-risk and low-scale experimentation to take place under less stringent rules. This issue limits competition and may stifle innovation in financial services.

Consumers, in turn, are hindered from enjoying certain improved value proposition from their trusted banks.

Regulators could help by exploring how to gear up to support innovation across its activities, working with industry and wider stakeholders. A risk-based approach to regulation should be consistent throughout the innovation lifecycle, providing an appropriate, flexible and simplified regulatory framework. A first step in this journey is to consider the creation of an EU framework for experimentation.

Banks are at the forefront of innovation. They seeking testing out new technologies, solutions and business models but are constrained by the existing regulatory framework which does not allow low-risk and low-scale experimentation to take place under less stringent rules. This issue limits competition and may stifle innovation in financial services.

Consumers in turn, are hindered from enjoying certain improved value proposition from their trusted banks.

Regulators could help solving this conundrum by gearing up to support innovation, working with industry, consumers and wider stakeholders. A risk-based approach to regulation should be consistent throughout the innovation lifecycle, providing an appropriate, flexible and simplified regulatory framework. A first step in this journey is to consider the creation of an EU framework for experimentation.

The development of an ecosystem in which businesses could grow and foster innovation is a vital component of a functioning and competitive Digital Single Market. A testing environment with a risk-based approach to regulation providing an appropriate, flexible and simplified regulatory framework for innovators to experiment new technologies or business models in interaction with regulators, is a key tool to foster innovation and competition.

Against this background, the EBF is convinced that an EU wide regulatory framework of experimentation would be the best solution to increase the level of innovation happening in the EU while also bolstering the EU’s competitiveness with other leading markets as a hub for innovation and talent attraction.

Considering the above, we welcome the ongoing work of the EBA to identify best practices in the design and operation of such schemes and the European Commission’s support in the creation of a network for the exchange of information. We consider this as a key step forward in ensuring stronger coordination for the benefit of EU technological environment and competitiveness

EBF position on EU framework for experimentation

EBF preliminary key messages on the Regulatory Framework of experimentation

THE EU’S FINTECH STRATEGY: CAN EUROPE COMPETE GLOBALLY?

EU SOURCES
GLOBAL SORCES
EBF ADVISER
Lucia Pecchini

Lucia Pecchini

Policy Adviser - Digital and Retail

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