In the framework of its new FinTech Knowledge Hub, the European Banking Authority (EBA) on Tuesday 3 July published two reports on the impact of FinTech on the economic models of banks and the resulting risks and opportunities.
To analyse current trends, the EBA classified banks into three categories: proactive, reactive and passive in terms of innovative technologies.
According to its findings, even the most proactive banks are exposed to risks. “Potential risks may arise both for incumbents not able to react adequately and timely, remaining passive observers, but also progressive front-runners that alter their business models without a clear strategic objective in mind, backed by appropriate governance, operational and technical changes”, it warns.
In terms of competition, the report notes that although banks are aware of the potential of new FinTech companies entering the market, there does not appear at this stage to be any direct competition with traditional banks.
Relations between banks and innovative technical solution providers currently come mostly under the heading of partnership and collaboration. Banks provide FinTech companies with financing, banking expertise, visibility and a vast clientele, whilst FinTech businesses supply innovative ideas, a more personalised approach and familiarity with emerging technologies, the report explains.
Although there is still uncertainty over how which these partnerships will be built into banks in the future, more active participation on the part of FinTech businesses could nonetheless alter the existing ecosystem, the EBA considers.
On the other hand, the report notes increased competition between banks themselves, to gain the “first-mover advantage”. The general tendency points to banks being at an advanced stage in terms of online and mobile banking solutions, but as for the use of big data, artificial intelligence and blockchain technology, they are still in an exploratory phase.
In line with its roadmap (see EUROPE 11983), the EBA will continue to monitor developments closely. (Original version in French by Marion Fontana)