The financial services market is currently undergoing an extensive process of digital transformation, with technology firms and banks playing an instrumental role. The digital upheaval we are all presently experiencing is so fundamental that it will determine the future of Europe in this key area. Europe must lay the foundations now for it to remain competitive, for it to realise its full potential for innovation and growth, and for it to secure its own sovereignty.
The need for a digital single financial market for Europe with a single set of fair rules for all participants is now more urgent than ever in this decisive phase of the digital transformation. The key will be to ensure that the principal of “same services, same risks, same rules” is adhered to meticulously. Only with a single set of rules implemented in the same way throughout Europe, can there truly be a level playing field with all the advantages that brings for customers and businesses.
Regulation: nowadays, banks are not the only providers of financial and payments services. However, the playing field is certainly not level when tech companies that do the same business as banks are subject to different prudential rules. We are in favour of precise and risk-based regulation of specific business areas, rather than blanket regulations applying to entire businesses. The same rules should apply to all those offering the same services.
Open data: here, too, it is a question of fair competition. The current legal framework creates asymmetries in which some companies – particularly established tech companies – act as data gatekeepers, whereas banks must allow them unilateral access to their customers’ data. Consumers and companies are not free to decide how their data is used. What is needed is a European legal framework that allows data to be exchanged between the various companies and across sectors – with the same opportunities for all market participants and fair conditions which, at the same time, ensure personal data and trade secrets are protected.
Six principles for improving customer protection, competitive equality and financial stability
In its position paper, the Association of German Banks identified six principles for improving customer protection, competitive equality and financial stability which will help to meticulously implement the principle of “same services, same risks, same rules”:
- Review the approach to supervision: regulate banking instead of banks
- Protect consumers and businesses: give due consideration to all the risks involved in payments processing
- Promote data sovereignty for customers: facilitate open data
- Minimise money-laundering risks: standardise preventative measures and improve cooperation between authorities
- Promote the diversity of services for customers: ensure fair market practices
- Avoid regulatory arbitrage: maintain confidence in the overall system and prevent the distortion of competition