Fintech industry stirs EU fears about banking disruptions
August 18 2016. By Vesela Gladicheva.
The rise of online financial services such as Britain’s Nutmeg and Sweden’s Klarna is drawing scrutiny from EU policymakers in Brussels, who have set aside 350,000 euros ($397,000) for outside research into how the upstart industry is affecting traditional banks.
Online startups offering financial services have been around for years, with some — such as UK peer-to-peer lender Zopa — going as far back as 2005. But more recent waves of innovation in the financial technology industry have stirred concerns that the upheaval could destabilize mainstream banking and investment services.
Fintech “can potentially disrupt the banking and other financial industries, which deserve specific attention considering their systemic role for the economy,” says a note from the European Commission outlining a tender for a study on the challenges and opportunities posed by the new industry.
Global investment in fintech ventures reached $5.3 billion in the first quarter of 2016, up 67 percent from a year earlier, according to a study by global consultancy Accenture.
“Changes in customer behavior and preferences, advances in technology and growing investment in fintech may be setting the scene for more radical change,” says the tender note.
The commission, the EU’s executive arm, is clearly seeking a middle ground between fostering regulatory stability and giving fintech businesses space to innovate.
The study’s authors would advise the commission on policies or regulatory measures it could frame to support the expansion of Europe’s fintech startups onto the global stage.
Their research would analyze fintech companies and their business models, specific financial products and services, and applicable rules, the note says. It would cover all activities of the fintech industry, including payments, deposits and lending, insurance and capital raising.
The tender says the researchers should avoid trying to define fintech activity too narrowly, in light of the industry’s continuing evolution.
The experts would be expected to examine the networks, platforms and mobile technologies that fintech startups use. They would also examine “blockchain” technology, which registers timestamped “blocks” of valid transactions made in virtual currencies on a public ledger.
The study should take a maximum of 16 months to complete.
Interested parties have until Sept. 29 to submit bids for the contract.