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Fintech Updated: 22 Sep 2017

Is Europe ready for the challenges posed by fintech?

For some time now, fintech has been a buzzword in the financial industries of the United States and Asia. However, Europe has only begun to realize its importance. Are the digital initiatives in the European Union and the fintech companies up to the challenges of the new environment? That question was addressed by the experts on a panel at the Eurofi Financial Forum 2017 held recently in Tallin, capital of Estonia, which holds the currently holds the EU presidency.


José Manuel González-Páramo, Executive Director of BBVA, participated in the panel. He stressed that if Europe wants to be competitive and remain at the vanguard of financial infrastructure, it must have regulation that supports the development of fintech solutions and the digitization of the financial sector. Coordination between government agencies and the private sector should be the new normal, instead of the exception.

If Europe aspires to be competitive and maintain its state-of-the-art financial infrastructure, a greater regulatory effort is needed "

In recent months, the EU has taken note of the importance of financial technology, better known as fintech, to the continent’s banking industry. In April, the EU published   “Fintech: the influence of technology on the future of the financial sector,” a  report that proposes a proportional, inter-industry and holistic focus for fintech.

That focus was precisely what BBVA’s Executive Director referred to during his speech at the Eurofi meeting. In his opinion, in the current context of disruption in the financial sector, two forces are setting the pace of change.  On is the banks’ vision of their future and their technological, financial and human resource capacity for transformation. The latter is clearly one of the greatest challenges facing the sector, he said. The other force is the role of regulators and supervisors, which will be crucial in speeding up or slowing down this transition.

González-Páramo pointed out that the regulators and supervisors have four objectives: improving efficiency and competition; promoting stability in the financial sector, by avoiding systemic risk and malfunctions in payment services; protecting consumers; and maintaining the security and solvency of the banks

He pointed out that a significant number of regulators and supervisors in different countries are already launching initiatives to promote digital financial ecosystems. He divided those into three categories: innovation centers, secure testing environments (or “regulatory sandboxes”), and new capabilities and a collaborative mentality.

A significant number of regulatory and supervisory authorities from different countries are already launching initiatives to promote digital financial ecosystems "

Achieving success in launching regulatory sandboxes and innovation centers has two prior requirements. In the first place, the authorities should commit themselves to establishing a transparent environment and to collaborating with all interested parties; and secondly, the authorities should make an effort to increase the knowledge and capacity of their personnel in technological innovation.

González-Páramo emphasized the importance of collaboration among authorities in the public sector to achieve responsible coordination in innovation and transformation. In this regard, the active participation of private and public sector institutions is also essential. BBVA’s Executive Director said that collaboration should extend to all authorities and not just supervisors and politicians. It should include market authorities, financial supervisors, Ministers of Finance and Industry, etc.

This holistic focus, which is also promoted by the European Parliament in its report, is the most reasonable way of finding an equilibrium between the promotion of new digital value proposals and protection against the risks associated with them.


Founded in 2000 and headquartered in Paris, Eurofi is the principal European financial forum. A platform with a great reputation, it promotes exchange and debate among numerous actors in the finance industry and public sector authorities in Europe and around the world, such as regulators and supervisors. Eurofi’s current president is David Wright, who took over from Jacques de Larosière en 2016.

BBVA was well represented at Eurofi Financial, with José Manuel González-Páramo participating in two important panels. One was entitled “Exchange of views: Banking Union: how to make existing pillars more effective?”; the other dealt with digital transformation: “Are EU digital and fintech initiatives up to the challenges?”. Also, Teppo Paavola, director general of New Digital Businesses at BBVA, took part in a panel entitled “Leveraging Fintech in the context of the CMU.”