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Finance Finland (FFI)

Question 1: Are the issues identified by the EBA and the way forward proposed in section 4.1 relevant and complete? If not, please explain why.
Finance Finland (FFI) agrees with the proposed way forward and would like to emphazie a few important topics within this area. 1. The need for a level playing field between incumbent banks and FinTechs according to the ‘same services, same risks, same rules, same supervision’ -principle, without killing innovation. Fintech players provide an important and valuable part to the financial ecosystem. Their specific business models need of course to be taken into account in the possible regulation by way of proportionality. It is very important at this stage for EBA to analyse the possible risks the new services and providers might generate. 2. The level playing field can also be seen a a key ingredient to consumer protection. Regulation and supervision should be the same for all players within the FinTech area, at the same time taking into account proportionality of the rules and the differencies in the business models and services. 3. We need a level playing field for sandboxes and innovation hubs within the EU. The approach to these seems to be diffirent depending on the specific country and their supervisory authority. As a general note, you could say that many of the banks and other financial institutions are already also FinTechs and providing services in this field.
Question 2: Are the issues identified by the EBA and the way forward proposed in subsection 4.2.1 relevant and complete? If not, please explain why.
FFI supports that further work should be conducted on identifying the prudential risks and opportunities for credit institutions stemming from the use of new technologies with the aim of providing guidance to supervisors on how to understand and evaluate these new prudential risks, developing coordinated supervisory approaches, and identifying potential system-wide issues that need to be addressed. However, we should also include (future) customer behaviour in the assessment of how new technologies is creating prudential risks and opportunities.
Question 3: What opportunities and threats arising from FinTech do you foresee for credit institutions?
New technology in itself is neither positive nor negative. FFI believes that it will be all about winning the customers. What do customers want? Winning the customers will be crucial in the outcome of which fintech companies (being large, small, old or new) will win or prevail. But it should be noted that the banking industry faces the digital challenges in competition with emerging technological players, who do not have to face the heavy regulatory burden imposed on the banking sector and are free of prudential regulation altogether.
Question 4: Are the issues identified by the EBA and the way forward proposed in subsection 4.2.2 relevant and complete? If not, please explain why.
FFI supports the EBA ongoing work on identifying the prudential risks and opportunities. As mentioned earlier, it is however important to include customer behavior aspects and also to keep in mind the principle of technology neutrality due to the speed of change in products and services.
Question 5: What opportunities and threats arising from FinTech do you foresee for payment institutions and electronic money institutions?
No comments from FFI.
Question 6: Are the issues identified by the EBA and the way forward proposed in subsection 4.3.1 relevant and complete? If not, please explain why.
FFI would like to point out that the move from a product/channel centric approach towards a customer centric approach is already happening/has happened.
Question 7: What are your views on the impact that the use of technology-enabled financial innovation and/or the growth in the number of FinTech providers and the volume of their business may have on the business model of incumbent credit institutions?
There will be an impact, but it will not happen overnight nor as a ‘big bang’. The changes will happen during next couple of years (maybe 5-10 years). And incumbent credit institutions might also become FinTech providers. Some might argue that this has already happened to some extent (fintech solutions launched by banks).
Question 9: What are your views on the impact that the use of technology-enabled financial innovation and/or the growth in the number of FinTech providers and the volume of their business may have on the business models of incumbent payment or electronic money institutions?
There will be an impact, but it will not happen overnight nor as a ‘big bang’. The changes will happen during next couple of years (maybe 5-10 years).
Question 10: Are the issues identified by the EBA and the way forward proposed in subsection 4.4.1 relevant and complete? If not, please explain why.
The whole business is based on trust. In this case the trust of consumers. FFI feels concerns presented by EBA should be looked at in more detail and reflected on whether regulation is needed.
Question 11: Are the issues identified by the EBA and the way forward proposed in subsection 4.4.2 relevant and complete? If not, please explain why.
FFI feels concerns presented by EBA should be looked at in more detail and reflected on whether regulation is needed. FFI supports the EBA cross-border attempt to harmonize consumer protection.
Question 12: As a FinTech firm, have you experienced any regulatory obstacles from a consumer protection perspective that might prevent you from providing or enabling the provision of financial services cross-border?
FFI can’t answer this question.
Question 13: Do you consider that further action is required on the part of the EBA to ensure that EU financial services legislation within the EBA’s scope of action is implemented consistently across the EU?
FFI sees that EBA could play an important role in sharing knowledge and experiences between and among different regulatory authorities. Supervisory coherence is key in the process of European Supervisory Authorities.
Question 14: Are the issues identified by the EBA and the way forward proposed in subsection 4.4.3 relevant and complete? If not, please explain why.
No comments from FFI.
Question 15: Are the issues identified by the EBA and the way forward proposed in subsection 4.4.4 relevant and complete? If not, please explain why.
FFI supports the EBA’s intention to assess whether EU legislation in place generates restrictions to digitisation of financial services. It would be very important to replace the use of paper or non-digital-native (e.g. pdf) documents in any form of communication. For instance, requirements that certain contracts or documents need to be physically signed in a bank branch, can make it difficult to digitalise certain products and services. As stated previously the approach should be technology neutral.
Question 16: Are there any specific disclosure or transparency of information requirements in your national legislation that you consider to be an obstacle to digitalisation and/or that you believe may prevent FinTech firms from entering the market?
There might be some application and documentation issues, if the information requirements have to be produced in one of the national languages, Finnish or Swedish. At least English should also be approved (at least by the national supervisory authority).
Question 17: Are the issues identified by the EBA and the way forward proposed in subsection 4.4.5 relevant and complete? If not, please explain why.
FFI believes that this is something that needs to be solved on a national level, with a cross-sectoral approach.
Question 18: Would you see the merit in having specific financial literacy programmes targeting consumers to enhance trust in digital services?
This is already actively being done in Finland. There seems to be a consensus that this is extremely important work for all age groups, but especially for the elderly.
Question 19: Are the issues identified by the EBA and the way forward proposed in subsection 4.4.6 relevant and complete? If not, please explain why.
FFI supports the proposed way forward. The concerns regarding the use of big data, prescriptive analysis etc. should however be handled by the GDPR-regulation.
Question 20: Are the issues identified by the EBA and the way forward proposed in section 4.5 relevant and complete? If not, please explain why.
FFI support the way for forward, if it lead to or maintain a level playing field between the different actors on the market.
Question 21: Do you agree with the issues identified by the EBA and the way forward proposed in section 4.6? Are there any other issues you think the EBA should consider?
FFI supports the way forward.
Question 22: What do you think are the biggest money laundering and terrorist financing risks associated with FinTech firms? Please explain why.
FFI believes that the main risk are within the area of new products or services in development that don’t take into account anti-money-laundering risk. For instance, virtual currencies can constitute a high risk with respect to money laundering and terrorist financing.
Question 23: Are there any obstacles present in your national AML/CFT legislation which would prevent (a) FinTech firms from entering the market, and (b) FinTech solutions to be used by obliged entities in their customer due diligence process? Please explain.
Companies that are providing similar financial products and services should follow the same rules and the same regulation.
Contact name
Peter Jansson