Carlos Costa, the head of the Bank of Portugal and member of the European Central Bank (ECB) board, said banks are going to have to be nimble and fast reacting if they want to stave off competition from FinTechs and digital banking apps.
Costa spoke at a conference in Lisbon about the potential dangers facing the banking industry, and how it needs to be able to use new tools to deal with the “new reality” of the banking ecosphere, Reuters reported.
“Although the ‘Big Tech’ is currently limited to Asia-Pacific and North America, we must not forget that they have a global vocation, and that their expansion into the European market is a matter of time,” Costa said. “The banking business model as we know it will inevitably undergo profound changes,” he said, pointing to the relative tech advantages held by digital ventures.
Big Tech encroaching into the financial world is a big concern. Facebook has been proposing its own cryptocurrency, Libra, much to the ire of regulators and legislators around the world. Google and Revolut, a digital banking app, have received a banking license in Lithuania, which would place them in the European Union.
“There will be an adjustment on the banks’ side,” Costa said. “Banks will have to be flexible and quick in anticipating client needs and the evolution of the market so as not to lose the direct relationship they have built with their customers.”
The ECB, in its ongoing concern for cryptocurrencies, has called for strict supervisory principles for digital currencies.
“In the case of Europe, neither the Commission nor the ECB intends to make Europe a no-fly zone for stablecoins,” European Central Bank Executive Board member Benoit Coeure said in an interview ahead of a Group of Seven (G7) report on stablecoins. “But stablecoins will have to meet the highest regulatory standards and adhere to broader public policy goals. There is certainly no judgment that stablecoins shouldn’t exist.”