Europe's top banking watchdog says regulatory authorities have little understanding of the risks involved in digital banking marketplaces, where banking products are offered alongside third party services.
While the arrival of multi-platform models offers opportunities for European consumers and firms, the European Banking Authority warns of the rise of new dependencies between financial and non-financial firms.
"This trend is expected to accelerate as financial institutions seek to satisfy customer ‘search for convenience’ and reduce costs, consistent with the core drivers of platformisation across all sectors of the EU economy," states the EBA. "However, new forms of financial, operational, and reputational interdependencies are emerging over which supervisors have limited visibility.
The EBA has identified the problem as a priority issue for 2022 and intends to develop a common questionaire for financial institutions to gain a better understanding of marketplace models. Information sharing between EU supervisory authorities about financial institutions’ reliance on digital platforms will also be used to co-ordinate EU-wide monitoring.
In addition, the EBA proposes to continue its efforts to "foster the sharing of supervisory knowledge and experience about digital platforms and enablers on a sectoral and multi-disciplinary basis, to enhance effective dialogue between authorities responsible for financial sector supervision, consumer protection, data protection and competition, including via actions under the coordination of the EBA’s FinTech Knowledge Hub".