Fintech firms are making an increasingly significant contribution to the financial services industry.
A recent report from Blumberg Capital, which focused on consumer trends in the UK, the US, Israel, France and Germany, showed how fintech is “gaining traction”. Products and services such as mobile wallets, peer-to-peer lending, online cross-border trade and mobile banking were found to be making an impact across all of the surveyed countries.
David Blumberg, founder and managing partner of Blumberg Capital, said the research indicated a “huge opportunity for fintech companies to grow and scale as more consumers begin to recognize the benefits of fintech”.
A separate report from KPMG, focusing on the UK market, revealed that total investment in fintech reached $1.4 billion in the second quarter of 2017, up from $0.1 billion a year earlier.
In light of the escalating size and importance of the market, one prospect businesses need to be aware of is tighter regulation.
This is a very real possibility in the EU, with the European Banking Authority (EBA) recently publishing a discussion paper outlining its approach to fintech. The paper includes the results of the first EU-wide “fintech mapping exercise” and the EBA’s proposals for future work in this area.
The regulator noted that fintech “has the potential to transform the provision of financial services”. For this reason, public authorities in the EU and beyond have started looking more closely at the impact the market is having “on the financial system and its regulation and supervision”.
Having already started looking into areas of innovation such as crowdfunding and virtual currencies, the EBA is now stepping up its examination of how fintech is impacting the industry.
Industry stakeholders have been invited to take part in a consultation to share their views on the scope of the EBA’s proposed work in these six areas:
- Authorization and sandboxing regimes
- The impact on prudential and operational risks for credit institutions, electronic money institutions and payment institutions
- The impact of fintech on the business models of these institutions
- Consumer protection and retail conduct of business issues
- The impact of fintech on the resolution of financial firms
- The impact of fintech on anti-money laundering and countering the financing of terrorism
The deadline for the submission of comments is November 6th 2017.