The goal of European Commission is a proposal for financial technology companies early next year, taking a first step towards evaluating the risks and rewards presented by a sector that is upsetting traditional banking. Fintech companies are expanding new patterns of online credit such as crowdfunding and peer-to-peer lending, and mobile apps for making payments and sending money overseas striking banks, decreasing margins, while being admired as innovators and for establishing new employment, are subject to few checks and regulations.
EU financial services representative Valdis Dombrovskis said “technological innovation in finance was a development to be encouraged, declaring a subjective task force meant to suggest recommendations for the sector in the first half of next year. It brings huge opportunities for consumers and for industry,. Our task force will help us make sure that our policy supports the pursuit of these opportunities, while addressing any harm that may rise”.
The Commission did not clarify whether fully-fledged regulation is on the cards, but some regulatory changes appear likely, financial institutions desired common rules and guidance for everyone. Fintech companies ussually can become allies of banks by helping lenders innovate while profiting from their clients and regulatory knowledge. In a paper on fintech, European Banking Federation warned against possible competition hazards arising from virtual platforms such as Google , Facebook or Apple, which may progressively use their consumers’ personal record to provide alternative financial assistance.