Should we rely on a few big companies to solve the major challenges that face the financial industry? This is one of the questions asked by the European Parliament Fintech Working Group (EPFWG). With the advent of digital, the world of financial services is becoming ever more difficult to navigate for both companies, consumers and legislators.
On October 27th, 2021, members of the group met with industry representatives and guest speakers to discuss how regulatory measures affect Fintech companies and their clients. And what legislators can do to identify and solve major blockers for a level and competitive EU fintech landscape.
As one of EUs most innovative providers trust services, ZealiD was invited share its view on the concerns and challenges that we face in our mission to provide reliable remote identification, signatures and the very infrastructure necessary for fintech to happen.
Positive progress from multiple perspectives
Industry representatives shared how their companies adopt current regulation, reflecting on how these regulations affect the quality of their services.
ZealiD CEO Philip Hallenborg described how the eIDAS Regulation forms the foundation of other legislative packages such as PSD2 and AMLD5. Mr Hallenborg noted that “EU has been very effective in providing the regulation and standards framework for identification - a vital part of all things fintech”. Having said that he continued: “but there are still major discrepancies and downright ignorance in how different member states execute the regulations”.
The meeting noted substantial progress made in the payments sector in the EU naming electronic payments, crypto assets and central bank digital currencies (CBDCs).
Regulatory updates are underway
Head of Conduct, Payments and Consumers at the European Banking Authority (EBA), Kirk Haubrich discussed the opportunities offered to businesses by the EU single market. Taking the meeting as an opportunity to discuss industry news with company leaders, Mr. Haubrich also announced that the EBA was currently working on guidelines on digital identities and remote onboarding.
Mr Jan Ceyssens, Head of Unit Digital Finance at the Commission’s DG FISMA, stressed regulatory compliance throughout the EU will not be reached if regulation and innovation don’t go hand in hand. He noted SEPA, Open Banking and value chains as some of the most important Fintech tools, which will continue to develop and shape the future of the industry.
Inconsistency leads to misunderstanding
Participants were asked about their experience with KYC (know your customer) compliance. John Collison, Co-Founder and President of Stripe, explained that his company is expected to comply with the same requirements regarding KYC as banks but added that this can be cumbersome as KYC is not entirely harmonized in the EU.
Offering a way to create a level playing field in the payment sector, Mr Haubrich suggested further conversation with EBA and the national authorities in KYC harmonization. Ceyssens noted that financial supervisory bodies are in fact working to ensure harmonious EU legislation in the financial sector.
Guests were invited to share their insights on the interaction of the GDPR rules with other relevant financial legislation, such as the PSD2 Directive. Collison acknowledged potential conflicts between GDPR and other pieces of legislation, mentioning some recent examples of their cooperation with supervisors and the European Commission.
ZealiD thanks the European Parliament for the opportunity to participate in the discussion. Philip Hallenborg added: “We were delighted to see how aligned we were with key policy makers regarding the immense benefits of eIDAS adoption for KYC and signing across finance, insurance, health, HR and many more sectors. And the real but manageable challenges that face innovation engines such as ZealiD”, our CEO noted.
Reference: https://www.europarl.europa.eu/committees/en/econ/econ-policies/cross-sectoral-policy?tabCode=fintech-wg
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