The term ‘FinTech’ denotes technologically-enabled financial services and products. Established technology (such as, in particular, the Internet) in combination with more recent ones (such as DLT or Big Data), allow market participants to change traditional value chains in the financial market. Regulators and policy makers face the challenge of identifying and addressing relevant risks, while allowing the market to innovate further.
Risks at a micro level belong to the typical four categories of risk inherent in the financial market, ie custody risk, agent risk, illegality risk and operational risk. These risks are coupled with the availability of new products and potentially a broader choice for consumers and businesses. From the macro perspective, the competitiveness of the EU financial market is at stake if FinTech remains underdeveloped, leading to less liquidity, as compared to other big markets. At the same time, there may be a contribution to systemic risk, ie the potential spill-over of crises to the real economy. Beyond that, FinTech poses questions of societal dimension, such as adequate consumer protection, financial inclusion/exclusion, privacy and civil rights in general. Hence, policy makers face a stark choices they will have to make on the basis of a plethora of rationales when shaping the framework for future financial services. These rationales are difficult to consolidate, and the relevant debate is only just about to begin.
The course aspires to provide the relevant conceptual basis for this policy debate. It will familiarise participants with the relevant characteristics of the underlying technologies (AI, Big Data, Cloud, Blockchain) and novel traits of relevant financial activities (FinTech-enabled payment, settlement, robo-advice, currency, platforms, insurance, etc). Further, instructors will share their analysis of the economic implications (caused, in particular by ‘disruptive’ business models) for financial markets in the EU and globally. Further, participants will understand how to situate Fintech within the existing regulatory perimeter of the relevant EU rules and will discuss the extent to which these rules need adaptation, modification or expansion.
Understand the broad use of the term FinTech, be able to provide various examples of the use of the term;
Understand the economic implications of various FinTech activities, in particular, the disruption of typical financial service value chains;
Understand the challenges posed FinTech activities for the protection of consumers and MSMEs and for financial stability;
Identify the regulatory framework in the EU relating to FinTech (data protection rules, prudential regulation, AML, PSD2, consumer protection, etc.)
Identify the potential for EU regulation to create a legal framework that supports FinTech while at the same time addressing relevant risks.