DIGITALISATION FINTECH IMPACT AND REGULATION Digital technologies are

DIGITALISATION, FINTECH IMPACT AND REGULATION - Digital technologies are also changing the ways in which firms do business and interact with their customers and suppliers. - Regulation and legislation were not typically seen as a major obstacle, although some firms noted that, while not a hindrance, regulatory frameworks did need to evolve - Banks face increased competition from new market entrants, including digital banks and Fin. Techs. Leading banks are forced to respond, investing in technology to prevent customer leakage and preserve their value chain.

FINTECH Fin. Tech is a term used to describe technology-enabled innovation in financial services that could result in new business models, applications, processes or products and could have an associated material effect on financial markets and institutions and how financial services are provided. Fin. Tech is the term used to describe the impact of new technologies on the financial services industry. It includes a variety of products, applications, processes and business models that have transformed the traditional way of providing banking and financial services.

CYBER SECURITY EBF survey reveals that addressing cybersecuty is the top priority for banks. Artificial inteligence and advanced analytics can play a key role in the prevention of cyber-attacks, reducing conduct risk and improving transaction monitoring to prevent financial crime. Fintech market moves beyond lending ‘Regtech’ is a fast-growing area as Mi. FID draws close. There is demand for technologies that help banks verify customers and comply with new banking rules. - Regtech is a blend word of 'regulatory technology' that was created to address regulatory challenges in financial services through innovative technology. - The markets in financial instruments directive- Mi. FID

REGULATORY APPROUCH The Commission invites the European Supervisory Authorities, by Q 1 2019, to map current authorizing and licensing approaches for innovative Fin Tech business models. The Commission encourages and will support joint efforts by market players to develop, by mid-2019, standardised application programming interfaces that are compliant with the Payment Services Directive and the General Data. Protection Regulation as a basis for European open banking ecosystem covering payment and other accounts.

REGULATORY APPROUCH Responses to the public consultation raise concerns that the use of such technologies may be prevented or constrained by the existing rules, for examle in the following ways: - blockchain-based applications may raise jurisdictional issues about the law applicable and liability issues; - the legal validity and enforceability of smart contracts may need clarification - there are uncertainties surrounding the legal status of ICOs and rules applicable to them, as set out already under point 1. 1. above; - Further analysis is necessary to assess the extent to which the legal framework for financial services is technology neutral and able to accommodate Fin. Tech innovation, or whether it needs to be adapted to this end. At the same time, it is necessary to ensure that financial stability, consumer and investor protection, anty money laundering requirements and law enforcement are

FINAL CONCLUSIONS Action 7 in the digital education action plan is aimed at tackling the challenges of digital transformation by launching: - an EU-wide awareness campaign targeting educator, parents and leaners to foster online safety, cyber hygiene and media literacy; - cyber-security teaching initiative building on the digital competence framework for citizens, to empower people to use technology confidently and responsibly.

FINAL CONCLUSIONS The Commission invites the ESAs to map, by Q 1 2019, the existing supervisory practices across financial sectors around ICT security and governance requirement, and where appropriate: - To consider issuing guidelines aimed at supervisory convergence and enforcement of ICT risk management and mitigation requirements in the EU financial sector; - If necessary, provide the Commission with technical advice on the need for legislative improvements.