Modern technologies enable a quick and comfortable provision of financial services. They help detect fraud, protect personal information and conduct complex tasks in a cheaper and more efficient way. The very nature of digital finance and the massive amount of data generated in the financial sector require from service providers a digital operational resilience. EDFA understands that such resilience can only be guaranteed by the application of cutting edge technology, proper regulation, and the exchange of experiences.
Many-to-many and one-to-many solutions enabled by decentralized technologies open a new world of financial services and digital assets, as well as plenty of new regulatory questions. Programmable smart contracts automate the execution of services and obligations. Immutability of decentralized records enhances security and auditability, while consumers get the benefit of having direct control over their assets and personal data thanks to self-custody. EDFA believes that decentralized solutions can release new sources of financing and lead to changes in the real economy, which correlates with innovations in the way companies and private ventures are funded.
Digital onboarding and identification
Digital finance cannot function properly without the possibility for companies to acquire new customers, and consumers to access all services and products, online. Biometric and other means of remote and electronic identification are often more secure, yet there are still many regulatory hurdles that hinder their application across member states. This leads to uneven customer experience and discriminatory environment. We believe therefore that rules governing digital identification should be harmonized. Moreover, attention should also focus on self-sovereign identity schemes as they can protect personal data and strengthen the security of identification means.
Licenses and sandbox regimes
For a true Single Market for digital financial services to exist, rules governing the entrance to the market and supervision should be harmonized across member states. Today, national financial supervisors have different authorization processes and take different approaches to applying proportionality and flexibility when licensing new business models. Furthermore, authorization processes may take years to complete, while some innovative companies do not have any official guidelines on the licensing or cannot apply for one at all. This often undermines EU companies vis-a-vis their global competitors. EDFA advocates for a universal accessibility to sandbox environments across the EU and an equal supervision and market access for innovative solutions.
Consumers and businesses are part of a digital ecosystem that extends well beyond financial services. Current regulation and policy for open banking does not allow for universal access and control over data, as PSD2 and GDPR have promised. To create a truly data-driven and API economy the philosophy of open banking needs to be extended to other financial sectors, such as insurance and investment services, and non-finance industries. Access rules and general standards across sectors would not only lead to a seamless customer experience but also enable new business models in financial and other services.
Fostering financial sector
Good regulation and investments are based on quality data and expert insights. To support regulatory framework and business development EDFA collects data, conducts research and facilitates information exchange among stakeholders.