Interview with Les Echos

Interview with Pentti Hakkarainen, Member on the Supervisory Board of the ECB, conducted by Solenn Poullenec on 12 June 2018

What is your approach to fintech firms who are moving into banking?

We have published guidelines for fintechs seeking to obtain a banking licence. We take the same approach to them as we do to traditional banks. We supervise them according to the same criteria. We do not wish to promote certain business models over others and we are neutral in respect of the technology used. We support the advance of new technologies and the boost to competitiveness but we don't want to encourage these developments by relaxing the rules or by taking a different supervisory approach.

Do fintechs present any particular risks?

We want to make sure that they understand and manage their risks. The difficulty is to keep up to date with changes which can occur very swiftly in financial technologies. Some firms use artificial intelligence or machine learning models. In order to manage the risks, not only the managers of fintechs or banks but also supervisors need to fully understand how these tools work. Another element that we need to look at closely in the context of fintechs and financial technologies is outsourcing, which can also be a source of risk.

Could there be systemic risks linked to fintechs?

We do not see compelling financial stability risks. Nevertheless, we are vigilant. We are paying very close attention to cyber risks. They can affect any kind of business but they may be particularly significant in certain areas of finance. We are also paying attention to the systemic risks that could emerge if there is only one or a small handful of providers available for a given financial technology. If the provider or providers were to run into problems, a lot of stakeholders could be affected.

What impact do you think fintechs could have on the European financial sector?

Fintechs and financial technologies could drive the banks to improve the quality of their services and to make them cheaper for consumers. More generally, the evolution of financial technologies and of the fintechs should lead to more banking services that are easy to access across borders. Given that we now have European banking supervision in place, this could bring about a more integrated European financial services market and speed up the consolidation in this sector.