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Finnish Financial Supervisory Authority

The Commission has established a Fintech taskforce and their public consultation on FinTech ended on June 15th. The Commission is going to draft a Fintech action plan based on its background work and the responds given to the Fintech consultation. The commission has already stated in its mid-term review of the Capital Market Union that As part of a comprehensive approach to enable FinTech, the Commission will assess the case for an EU licensing and passporting framework for FinTech activities in Q4 2017." It is important to take this schedule in mind in the timeline of the further work of EBA and to actively discuss with the Commission."
Yes, in our opinion EBA should put much emphasis on the work related to risks and risk management. It is vitally important to ensure that the risk management of FinTech entities is at sufficient level. This should be the primary focus of the EBA work on FinTech
Partnership opportunities and improved user experience.

Threats are related to risk management, testing and cybersecurity. Special attention should be put to proper testing and audits when building new services. Effort should also be put to ensure that Fintech entities have their risk management practices at sufficient level and that they have understanding of the risk management required from financial service providers
Yes
Value chains are becoming more complex. The rise of FinTech might accelerate the provision of financial services that are actually a combination of services provided by many entrepreneurs, each of them providing a certain part of the “total” service that the customer is using. This could be beneficial for PI’s and EMI’s, since it allows them to concentrate on the part that is essential for their business and that is their core knowhow. Simultaneously, there might arise risks if the co-operating parties or sub-contractors do not fulfil their duties and the PI/EMI should bear the responsibility towards the customer/regulator.
Yes
Credit institutions are likely to lose some of the income that they currently receive from payments to payment initiation service providers introduced by PSD2. This might have an effect on incumbent credit institutions business models.

Incumbent credit institutions also face challenges with the lean working methods that FinTech providers have. Incumbent credit institutions may have very long and detailed decision making processes.
Yes
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Yes
Yes
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No
Yes
Yes
No
Yes the issues are relevant, but EBA should also keep in mind that there are also other actors than NCAs that are actively involved in the work related to financial literacy. In Finland, the central bank is working a lot with the promotion of Financial literacy in cooperation with the Association for Teachers of History and Social Studies in Finland
Yes, but it should be considered carefully that who would be the best and relevant body for drafting such programmes.
Yes
Relevant, but not complete. As financial services markets evolve thanks to digitalisation, we are likely to see more financial service providers entering the market. It is highly likely that not all of these services gain a sufficient market share and a number of customers for the services to become profitable. Therefore we are going to see financial service providers that enter the market, but end offering their services in a few years' time.

Because of this market development, a lot of emphasis should be put to resolution. There should be guidelines on exit plans. FinTech entities should have and exit plan or a plan in case of sales of their business to another service provider in place already before entering the market.
Yes
Improper risk management. FinTech firms might lack the ability to identify all the relevant risks related to AMT/CTF when drafting their risk management principles. Further guidance might be needed.
No
Hanna Heiskanen
+358503091819