In an attempt to compete against the U.S. and Asia in the financial technology sector, Brussels will propose pan-EU licenses to help FinTech companies operate across the bloc.
According to Financial Times, the European Commission is expected to present draft legislation early next year that will remove administrative hurdles to the cross-border operation of crowdfunding sites and online peer-to-peer lending services.
The licensing plans, which could be extended to other parts of the FinTech sector, will ensure that EU companies can grow and compete with traditional banks. As part of an EU law that will take effect next month, the EU has already given FinTech companies clearer legal rights to access bank data.
Some of the EU’s biggest FinTech successes so far include TransferWise, the Estonian-developed foreign exchange company, and France’s PayPlug, which makes it easier for sole traders to accept credit card payments.
“Europe is certainly well-placed for new FinTechs emerging, both in terms of the necessary skills, financing for innovation [and] availability of capital,” said Valdis Dombrovskis, the EU Commission vice president responsible for financial services. “Everything is there for Europe to be a great place to start FinTechs.”
Yet “too many barriers” across EU member states prevented companies from growing. “We still don’t have this digital single market … and that’s why we see many European FinTechs then going to the U.S. or Asia to scale up,” said Dombrovskis.
The licensing plans are part of the Capital Markets Union, which works to remove national administrative requirements and rules that stymie cross-border investment.
In addition, Brexit is expected to provide opportunities for other EU financial centers to challenge London’s status as Europe’s main FinTech hub.