The European Union’s banking and payments industry is increasingly using digital platforms to keep in touch with customers, and this trend is accelerating in order to satisfy the quest for customer convenience and reduce costs, the European Banking Authority (EBA) said in a report published on Tuesday 21 September.
Such an approach creates “new forms of financial, operational and reputational interdependencies” within the banking and payments sectors, the Authority notes. And, although it does not advocate any specific legislative change, the EBA believes that the shift of financial services towards digital platforms poses “challenges” for supervisors in monitoring the market and detecting risks arising from these interdependencies.
The vast majority of these authorities, it notes, have a “limited understanding” of platform-based business models.
In order to remedy this situation, the European authority sets out a number of recommendations that will promote a better understanding of the use of digital platforms in the banking and payments sector. These recommendations include: - sending questionnaires to financial institutions; - the creation of a framework for the collection of data on the interdependencies between digital platforms and the financial sector; - the creation of indicators to analyse the risks inherent in this development.
See the report: https://bit.ly/3lKsuxB (Original version in French by Mathieu Bion)