The BaFin fintech project

In December 2016, BaFin successfully completed the fintech project that it had launched at the end of 2015 (see info box "What are fintech companies?"). One objective of the project was to ensure that BaFin handles fintech companies and their supervisory concerns appropriately. Another aim was to provide the companies – which often feature a certain start-up culture – with guidance in order for them to better understand BaFin's supervisory viewpoint. Depending on their business models, fintech companies also require authorisation from BaFin and must meet the relevant supervisory requirements. The principle of "same business, same risk, same rules" applies, in combination with the principle of proportionality.¹

It became clear as the project progressed that the use of new technologies is also becoming ever more important for the established financial industry, which is increasingly responding to the challenges of digitalisation. For BaFin, continuing digitalisation is consequently a wide-ranging topic that it has to understand in detail to address the associated regulatory and supervisory issues adequately and with due consideration of the affected companies.

Information and communication

In order to provide fintech companies with an introduction to the range of issues covered by supervision, BaFin's website offers customised, compact information for fintech companies which addresses questions regarding the most commonly used fintech business models at the present time (see info box "Common fintech business models"). This information can be understood without in-depth legal knowledge and is provided in German and English.

BaFin has also made available a contact form on its website that entrepreneurs can use to contact the authority with specific questions. The form is also used to determine the competent unit within BaFin and to quickly designate a specific contact person.

BaFin also supports direct dialogue by participating in various events and being available to answer questions. BaFin hosted its own conference, BaFin-Tech 2016, in June 2016.

BaFin is further expanding its range of information and communication for fintech companies, and is adapting this to new developments. Innovative business models, too, can only become permanently established on the market when the entrepreneurs are familiar with supervisory requirements.

Innovative financial technologies

During the project it once again became clear that fintech companies draw on state-of-the-art technologies to pursue their innovative business models. Big data, artificial intelligence, distributed ledger technology and blockchain are just some of the buzzwords that are frequently used in this context. These technologies are driving forward the digitalisation of the financial market, and thus present both an opportunity and a challenge for established financial institutions. New issues are coming into play for BaFin, too, both in supervisory law in general and with respect to collective consumer protection.

A new division for innovative financial technologies

A newly established unit within the President's Directorate will concentrate on innovative financial technologies, not only but also because these have increasing importance for established providers of financial services. The unit will work together with the internal BaFin network of experts that has already proven to be successful as part of the fintech project. The new unit is also intended to consolidate the requisite expertise to represent BaFin in national and international regulatory projects dealing with innovative financial technologies.

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