Technology, fintech and capital markets: The EU experience with digital transformation

Abstract

<p>The path to digitization and datafication in European capital markets rests on four pillars, all of which came into effect in 2018 and which we characterize as a second ‘Big Bang’ for European capital markets digitalization: (1) extensive reporting requirements imposed after the 2008 global financial crisis to control systemic risk and change financial sector behaviour; (2) strict data protection rules reflecting concerns about dominant actors in the data and technology industries; (3) the facilitation of open banking to enhance competition in banking and payments; and (4) systems for digital identification for individuals and legal entities designed to enhance financial integrity and transparency. This chapter analyses these pillars and suggests that, together, they have triggered a transition to data-driven finance and underpin the future of digital capital markets in Europe. The pillars bolster an emerging ecosystem which aims to promote a balance among a range of sometimes conflicting objectives, including systemic risk, data security and privacy, efficiency, customer protection and market integrity. The experiences of Europe in this process provide insights for other jurisdictions in developing regulatory approaches to the intersection of data, finance and technology.<br></p>