EU weighs strategy to compete in global fintech
12 Sep 2017 - 0:00
Brussels: European Union finance ministers will discuss this week a plan to attract more financial-technology companies, in a bid to bridge the gap with global competitors and offset the loss of Europe’s main fintech market after Britain leaves the bloc.
The EU fintech market is dwarfed by those in China and the United States. It is concentrated in Britain, which is set to quit the EU in 2019, leaving the bloc with a fraction of the small but flourishing industry.
In a meeting on Friday in Tallinn, the Estonian capital, EU finance ministers will discuss how to make the continent more attractive to fintech companies and encourage the cross-border expansion of existing companies, which so far are focussed on national markets, according to documents seen by Reuters.
China is the fintech leader, with a market worth $102bn in 2015, according to a paper prepared by the Brussels-based think-tank Bruegel for the Tallinn meeting. The US market amounts to $36bn. Both dwarf the EU market, which is worth $6bn and is growing more slowly.
EU ministers will discuss rule changes and the best strategy to reverse this trend. Proportional and flexible regulations are recommended to favour start-ups and alternative businesses, the Estonian paper says.
The fintech industry is a small part of financial services, but it poses challenges to banks and other conventional actors in businesses ranging from lending and payments to financial advice and insurance.
Those businesses could be hit much harder if small fintech start-ups started to team up with data-rich digital companies like Amazon or Google, Bruegel warned - they may hold more information on borrowers and lenders than banks.
Amazon already has its own lending service for small businesses, which has provided $3bn in loans since it opened in 2017.