European Central Bank issued a financial technology bank license application guide


nnThe European Central Bank for the “single regulatory mechanism” countries issued financial technology bank license application guide, introduced the application assessment process and standards, the definition of financial technology banks. The guidelines place particular emphasis on the risks and possible actions of such banks, although the central bank is as neutral as possible, but it is not clear whether the specific financial technology banking standards are in line with existing bank requirements. However, if the central bank in the policy to help financial technology banks in the competition to develop, perhaps the traditional banks will be forced to upgrade product-level services.n
nTranslation: Annie_Xun
The European Central Bank (ECB) has issued a Guide to assessments of Fintech credit institution license application.n
The purpose of the guidelines is to improve the transparency of potential financial technology bank license applicants and to increase their understanding of the procedures and criteria for applying the ECB license application for the “single supervisory mechanism” (SSM). The ECB is neutral in the discussions, saying neither support nor block the financial technology banks.n
ECB said it would like to ensure that financial technology or pure digital bank normal application license, risk control perfect. The document shows that the ECB wants to confirm a fair competitive environment, and the financial technology bank “is consistent with the standards of other banks.”n
ECB so defined Financial Technology Bank:n
“The creation and delivery of banking products and services in this business model is based on technological innovation.” Because of the diversity of institutions and technologies in SSM countries, this broad definition captures different credit agency activities within different legal systems. Definition includes:n
n1, the existing banks in the internal development of financial technology solutions, the acquisition of financial technology companies or with such companies to reach a strategic partnership (white standard, outsourcing, etc.), to achieve technological upgrading and technological innovation integration.n
nn2, Financial Technology Bank is a new market participants, through technological innovation and existing banking and financial services companies (such as payment agencies, investment companies, electronic money institutions, etc.) in the value chain competition. Covering the banking business, and therefore can be seen as a new market participant who needs a bank license.n
nThe guidelines clarify applicability requirements and organizational structure to ensure that financial technology banks develop appropriate controls and operational controls needed to eliminate risk.n
Interestingly, ECB suggests that financial technology banks’ liquidity standards may be higher than traditional banks. The document mentions that financial technology banks may seek more risks in the process of rapid development that may exceed the minimum capital requirements. Of course, this will bring the financial technology banks can compete with the traditional banks speculation, or ECB will develop a higher standard?n
In addition, the Financial Technology Bank was asked to draft a bankruptcy exit plan. In fact, ECB wants financial technology banks to shut down business in an orderly manner, not to harm consumers, or to require regulatory assistance.n
Although ECB documents may try to show a neutral attitude, it is unclear whether this goal is achieved. Whether the purely digital banking standards developed by ECB will be higher than the traditional financial industry and are not equal to those of traditional financial companies. If you create a competitive eco-environment, financial technology banks may need to try to challenge traditional banks, which requires more efforts by ECB rule makers. Perhaps the ECB should not be so neutral to help innovate financial companies in the European financial ecology to gain a firm foothold. But in that case, traditional banks may be forced to provide better and more favorable services.n

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