Topic Fintechs Digitalisation and fintech companies
Article from the Annual Report 2016 of the BaFin
The financial sector is undergoing radical change, driven primarily by digitalisation. Companies with innovative technology-driven business models – so-called fintech companies – are pushing onto the market and pose a challenge to established companies (see info box "The BaFin fintech project"). However, even the established companies are increasingly using digitalised processes. They are forging alliances with fintech companies, draw inspiration from their models, or develop their own ideas.
The BaFin fintech project
At the beginning of 2016, BaFin established a fintech project group; as at 1 January 2017, its responsibilities were transferred to an organisational unit in the President's Directorate specifically set up for the purpose.
Thanks to the large data volumes that can now be collected and analysed, insurers can tailor their tariffs to customers with increasing precision. However, the digital revolution also spans technological innovation in payment transactions, crowdfunding, automated financial advice, comparison services platforms and virtual currencies, all of which hold opportunities as well as risks. Security, in the sense of protection against cyber attacks, is therefore an important issue for fintechs and established companies. The threat of these types of attacks increased again in 2016.
Regulation of fintech companies
Whether and in what way fintech companies are regulated depends on the business model they follow, based on the principle of "same business, same risk, same rules". Once a fintech company has entered regulated territory, it will be supervised by BaFin in the same way and according to the same rules as established companies – following the principle of proportionality. In this process, BaFin tries to pursue a technology- and innovation-friendly administrative practice, for example by communicating clearly and promptly. BaFin has no mandate to stimulate economic development – to avoid potential conflicts of interest, among other reasons.
Information tailored to affected companies
Start-ups and fintech companies have, for some time now, been able to contact BaFin by using a special online form. To make it easier for companies to familiarise themselves with supervisory issues, the BaFin website provides compact, easy-to-follow information on a number of fintech business models that is specifically tailored to fintech companies. BaFin also supports direct dialogue by attending various events. In June, it hosted its own conference, BaFin-Tech 2016.
