EBA to focus on risks of financial innovations in 2019

The European Banking Authority (EBA) published today its detailed annual work programme for 2019, describing the specific activities and tasks of the Authority for the coming year and highlighting the key strategic areas of work from 2019 to 2021.

In 2019, the EBA will focus on (i) leading the Basel III implementation in the EU; (ii) understanding risks and opportunities arising from financial innovation; (iii) collecting, disseminating and analysing banking data; (iv) ensuring a smooth relocation of the EBA to Paris; and (v) fostering the increase of the loss-absorbing capacity of the EU banking system.

With regard to the risks and opportunities stemming from Financial innovation, the EBA said that it offers great opportunities but also introduces new risks and challenges, having the potential to transform the financial system across a broad range of products and services. Product innovation, including the implementation of the simple and transparent securitisation framework, and the sustainable finance and green bonds standards, will be an important element in the EBA’s work.

Financial technology will affect many aspects of banking, such as business models and consumer interaction, reporting and compliance (including anti-money laundering), and the development of new financing.

The EBA has a FinTech Roadmap in place, approved by the Board of Supervisors in February 2018. The EBA will have to secure the right balance between close monitoring of the perimeter and ensuring supervisory neutrality towards new technology. By setting up the EBA FinTech Knowledge Hub, the EBA will facilitate information and experience sharing, to raise awareness and to support the transfer of knowledge on FinTech.

The EBA will work in the following policy areas: (i) authorisation and regulatory sandbox regimes; (ii) prudential risks for institutions and the impact of FinTech on the business models of institutions; (iii) broader cyber security issues; (iv) consumer protection and retail conduct of business issues; (v) the impact of FinTech on the resolution of credit institutions and investment firms; and (vi) the impact of FinTech on AML/CFT.

The EBA statement and the full work programme are available here.