European Banking Federation wants fintech at overclock speed
Responding to the European Union (EU) consultation on fintech, the European Banking Federation (EBF) wants the creation of an inclusive ecosystem and asks for people to get on with it.
Earlier this year, the EC called for feedback and said it wanted to prise open national barriers as only 7% of consumers currently buy financial services from another EU member state. Prior to that, the EC set up a fintech task force to boost innovation in the region.
The EBF welcomes both developments and desires a “customer-centric and inclusive ecosystem in which all actors, ranging from small start-ups to established multinational banks, are committed to serving clients with innovative financial services”.
Wim Mijs, chief executive of the EBF, adds “fresh competition helps us keep our focus” and “we need action at an overclock speed please”. No one could argue that he isn’t polite.
Some of the EBF’s request include a “forward-looking approach to policy needs to ensure that data protection and trust in financial services remain adequate”; and a “properly balanced approach” to create a regulatory environment “in which both newcomers as well as established businesses can flourish”.
The EBF believes that to help Europe remain competitive globally the EU needs to update prudential requirements for investments in software by banks.
At present, the software of EU banks is “treated as an intangible asset”. According to the EBF, this means banks have to deduct their software investment from their key capital ratio when calculating capital requirements.
It sees software as a strategic asset for European banks and says the current prudential treatment is a “significant disincentive for investments in innovation”. In the EBF’s view it also distorts the global playing field, particularly when compared to the US, where software investments can be treated as tangible assets that do not have to be deducted from a bank’s capital ratio.
EBF was launched in 1960. It comprises 32 national banking associations in Europe that together represent some 4,500 banks.