European fintech alliance: a tool for European sovereignty?

Several fintech associations from all over Europe (including Spain, Italy, Portugal, Holland, Sweden, Poland, Finland, Hungary, Czech Republic, Romania, Slovakia, Luxembourg and Bulgaria), have met in Brussels on October 24, 2019 with the presence of the European Commission and the European Banking Federation (EBF), in order to promote the fintech ecosystem in Europe and create the foundations for developing an alliance of the entire ecosystem and further develop the culture of innovation on the continent.

The meeting held in Brussels served to develop new initiatives, share the experience in the development of this environment in each country and create synergies to improve all procedures and company services in the ecosystem. All of the European associations have been in contact for several years trying to reach different agreements and share the best practices to encourage and promote dynamics created by the ecosystem, as well as strengthen communications between the different associations in the continent and the European Commission, to reach in particular, agreements in the field of good practices and regulation. For instance, national fintech associations from Spain and Portugal are already linked through a partnership with Latin America fintech associations via Fintech Ibero-America Alliance. This agreement, which has been signed in 2016, is very useful to analyse the opportunities of the region and to foster partnerships between fintechs in Latin-America, Spain and Portugal. In fact, it is important to remind that emerging countries represent many potentialities in the field of new economy, and countries like Brazil, Mexico, Chile or even Colombia are growing in the field of fintech and digital uses.

Creating a European framework

For the development of an alliance between European associations, several important issues were discussed this day such as the development of the PSD2 regulation, the creation of a regulatory sandbox or the promotion of cryptocurrencies and crowdfunding, among others. Thus, it is important to mention in this context that several topics – such as cryptocurrencies – are analysed in very diverse ways in Europe. In France, for instance, cryptocurrencies are characterised by a reluctant position from national regulator, who talks about ‘crypto-assets’ since it is not a real money, whereas in Portugal, there is a tax regulation for cryptocurrencies in order to attract some investments in this innovation. Other example, is Switzerland, where the Finma gave two licences authorising activities in this field. Creating a real European regulatory framework about cryptocurrencies seems consequently very important to ensure a real asset for Europe at a global level.

In the same way, artificial intelligence, seen as a real tool for financial services of tomorrow, must be addressed, regulatory, at a European level to create a real framework for this innovation. Main value of the evolution of financial services, artificial intelligence, is nowadays a subject of work in many countries and institutions. In France, for instance, government himself has defined an action on this field, represented by a report realised by Cédric Villani, French Deputy. In the financial sector, French banking federation (FBF) has also presented this year a white paper which has been written with Finance Innovation. In payments market, AI is mentioned in French payments committee’s action plan as one of the main technologies to adopt in the field of payments in 2019-2024, above all to reinforce security. Nevertheless, questions remain important. In fact, many issues are linked to deployment of artificial intelligence such as ethical issues and regulation standards. Which legislation has to be defined in this field? national, European, global? Considering the evolution of payments and financial markets and the importance of European sovereignty in a globalised economy, it is obvious that a national view would be unappropriated. In fact, the development of new technologies and new models seems to be a main value for Europe. That’s why it is more than obvious that AI regulation has to be European. Other reason: the value of this innovation for the reinforcement of security in the field of instant payment, which is natively European. In fact, many banks, in France, consider that AI would be a good tool to adapt security in a context of instant payment, reinforcing scoring of risks. Other example: the recent creation of the Pan European Payment System Initiative (PEPS-I), in the field of payments, which testifies to the fact that Europe needs a common strategy in this activity.

It seems obvious, as a result, that creating collaboration between different European countries is one of the huge steps for the reinforcement of European sovereignty in the field of payments and digital uses. And fintech has a strong role to play in this context. Following the meeting in Brussels, the European associations will call on the other entities in the continent to initiate a recurrent and more fluid dialogue process with the European Commission in Brussels, which facilitates the connection and understanding between European Fintech companies and will also seek to promote and support community regulatory initiatives, by identifying common problems and issues. The next meeting is scheduled for January 2020.

About Andréa Toucinho

Payments and financial services expert, Andréa Toucinho worked during 10 years as Journalist - Editor in Chief of Point Banque magazine and Head of "PayForum" and "Banque et Innovation" events. She works since 2018 in consulting area with activities in Paris as Director of Studies, Prospective and Training of Partelya Consulting, and Ambassador for France of European Women Payments Network (EWPN). She also developed activities with Portugal and Spain as France Representative of Aefi and Afip Fintech Associations. She realised in 2018 a white paper about instant payment which has been published in November in French payments market.