COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS on a Digital Finance Strategy for the EU
Date: 2020-09-24
Institutions: Directorate-General for Financial Stability, Financial Services and Capital Markets Union, European Commission
Subjects: EU strategy, digital economy, digital single market, digital technology, electronic banking, electronic money, financial services, innovation, new technology, payment system

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 24.9.2020  COM(2020) 591 final  COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS on a       Digital Finance Strategy for the EU  
 
 
1.  Context 

The  future  of  finance  is  digital:  consumers  and  businesses  are  more  and  more  accessing 
financial  services  digitally,  innovative  market  participants  are  deploying  new  technologies, 
and existing business models are changing. Digital finance has helped citizens and businesses 
tackle  the  unprecedented  situation  created  by  the  Covid-19  pandemic.  For  example,  online 
identity  verification  has  enabled  consumers  to  open  accounts  and  use  multiple  financial 
services  at  a  distance.  A  growing  proportion  of  in-store  payments  are  now  digital  and 
contactless,  and  on-line  purchases  (e-commerce)  have  significantly  increased.  Fintech 
solutions have helped to broaden and speed up access to loans, including loans supported by 
government in response to the Covid-19 crisis. Ensuring safe and reliable operation of digital 
infrastructures  has  also  become  more  important,  as  more  people  access  financial  services 
online and financial sector employees themselves work remotely.  

If there was still any doubt it is now clear: digital finance has a lot to offer, and the people 
and businesses of Europe are ready for it.  

Europe must take full advantage of this in its recovery strategy to help repair the social and 
economic damage brought by the pandemic.1 Digital technologies will be key for relaunching 
and  modernising  the  European  economy  across  sectors.  It  will  move  Europe  forward  as  a 
global digital player. At the same time, users of financial services must be protected against 
risks stemming from increased reliance on digital finance.  

Supporting  the  digital  transition  in  the  EU  is  a  key  priority  for  the  Commission,  as  set  out 
earlier  this  year2  and  more  recently  in  the  context  of  the  recovery  plan3.    Europe’s  financial 
sector can build on many innovative projects across Member States, and on its leading role in 
areas such as digital payment technologies. Embracing digital  finance will contribute to the 
overall  digital  transformation  of  our  economy  and  society.  This  would  bring  significant 
benefits to both consumers and businesses.  

Against  the  background  of  key  trends  in  digital  innovation  (section  2),  this  communication 
sets out a strategic objective for digital finance in Europe  (section 3), and four priorities and 
related actions we intend to take to enable consumers and businesses to enjoy the benefits of 
digital  finance  while  also  mitigating  risks  (section  4).  This  Communication  builds  on  the 
2018 FinTech Action Plan,4 and the work of the European supervisory authorities (ESAs). It 
has  also  been  informed  by  responses  to  our  public  consultation  and  the  digital  finance 
outreach events held in the first half of 20205, the report on digital finance from the European 

1 Communication from the Commission to the European Parliament, the Council, the European Economic and 
Social Committee and the Committee of the Region, Europe's moment: Repair and Prepare for the Next 
Generation, COM/2020/456 final, 27.05. 2020 
2 Communication from the Commission to the European Parliament, the Council, the European Economic and 
Social Committee and the Committee of the Region, Shaping Europe’s Digital Future, COM(2020) 67 final, 
19.02.2020  
3 Communication from the Commission to the European Parliament, the Council, the European Economic and 
Social Committee and the Committee of the Region, Europe's moment: Repair and Prepare for the Next 
Generation, COM/2020/456 final 
4 Communication from the Commission to the European Parliament, the Council, the European Economic and 
Social Committee and the Committee of the Region on a FinTech Action plan, COM(/2018)/109 final, 
08.03.2018 
5 https://ec.europa.eu/info/publications/digital-finance-outreach-2020_en  

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Parliament6,  the  report  of  the  expert  group  on  regulatory  obstacles  to  financial  innovation 
(ROFIEG),7 the recommendations of the Capital Markets Union High-Level Forum,8and the 
SME strategy for a sustainable and digital Europe.9  

Payment services play a key role among digital financial services, being at the cutting edge of 
innovation and instrumental to support the digital economy. Digital payment solutions enable 
individuals  and  companies  to  transact  safely  and  efficiently.  They  are  indispensable  for 
paying in shops and in e-commerce, settling bills, repaying loans or mortgages, transferring 
money, paying salaries or pensions.  As such, they require specific policy measures which are 
developed in the communication entitled “A Retail Payments Strategy for the EU”, published 
together with this communication.10  

2.  The background: digital innovation trends 

The  digital  transformation  of  the  economy  has  changed  innovation  and  business  models 
including in financial services.  

Innovation increasingly takes a digital form,  making it easier for firms  to grow. To an 
ever-increasing  extent,  innovation  implies  new  products,  processes  or  business  models 
enabled  by  digital  technologies.  From  having  a  mere  support  function,  information 
technology (IT) systems in combination with appropriate software have become a core pillar 
of  business  activities  for  many  firms.  This  is  because  digitalisation  offers  substantial  new 
opportunities,  as  digital  networks  and  data  services  generally  facilitate  economies  of  scale, 
enabling the provision of more qualitative services at a lower cost . 

Innovation  cycles  are  accelerating,  becoming  more  open  and  collaborative.  Digital 
technologies  and  applications are increasingly built  in  a modular way,  communicating with 
each  other  via  application  programming  interfaces  (APIs).  They  make  it  possible  to  tailor 
services  more  closely  to  customer  demand.  They  also  provide  more  opportunities  for 
experimentation  and  collaboration  between  various  actors.  This  may  have  a  number  of 
consequences for the way financial services are provided.  

Data  is  becoming  a  key  asset  for  innovation  along  with  IT  infrastructure.  Data  has 
become  more  important  than  ever  for  financial  services.  The  availability  of  digital  data 

6  Report with recommendations to the Commission on Digital Finance: emerging risks in crypto-assets - 
regulatory and supervisory challenges in the area of financial services, institutions and markets” 
(2020/2034(INL)), 
https://oeil.secure.europarl.europa.eu/oeil/popups/ficheprocedure.do?reference=2020/2034(INL)&l=en 
7 On 13 December 2019 the Expert Group on Regulatory Obstacles to Financial Innovation (ROFIEG), set up 
by the European Commission in June 2018, published its recommendations on how to create an accommodative 
framework for technology-enabled provision of financial services. 
https://ec.europa.eu/info/publications/191113-report-expert-group-regulatory-obstacles-financial-innovation_en 
8 https://ec.europa.eu/info/publications/cmu-high-level-forum_en  
9 Communication from the Commission to the European Parliament, the European Council, the Council, the 
European Economic and Social Committee and the Committee of the Regions on An SME Strategy for a 
sustainable and digital Europe, COM(2020)203,  10.03.2020 
https://ec.europa.eu/info/sites/info/files/communication-sme-strategy-march-2020_en.pdf 
10 Communication from the Commission to the European Parliament, the European Council, the Council, the 
European Economic and Social Committee and the Committee of the Regions on a retail payments  strategy for 
Europe, COM(2020)592 

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enables  more  accurate  prediction  of  future  events,  thereby  allowing  for  the  provision  of 
bespoke  services.  Analysing  a  merged  dataset  provides  more  insights  than  analysing  each 
dataset  separately.  The  economic  benefits  derived  from  a  specific  dataset  are  higher  when 
multiple parties have simultaneous access to it. In addition, use of associated technologies is 
necessary  to  maximise  data  value.  IT  infrastructure  today  increasingly  sits  in  the  cloud, 
offering  a  high  degree  of  operational  flexibility  and  facilitating  access  to  advanced  data 
processing  technology.  These  developments  also  raise  important  new  issues  for  protecting 
consumers and a responsible use of their data. 

At  the  same  time,  innovation  is  changing  market  structures.  Europe  is  home  to  many 
successful  Fintech  start-ups.  Incumbent  firms  are  fundamentally  overhauling  their  business 
models,  often  in  cooperation  with  Fintech  companies.  Technology  companies  both  large 
(“BigTech”) and small are increasingly active in financial services. These developments are 
changing  the  nature  of  risks  to  consumers,  users  and  financial  stability  and  they  may  also 
have a significant impact on competition in financial services. 

3.  Our strategic objective: to embrace digital finance for the good of consumers and 

businesses 

Europe  and  its  financial  sector  must  embrace  these  trends  and  all  the  opportunities 
offered by the digital revolution.  

Europe must drive digital finance with strong European market players in the lead.  

Our aim is to make the benefits of digital finance available to European consumers and 
businesses.  

Europe  should  promote  digital  finance  based  on  European  values  and  a  sound 
regulation of risks.  

Our consultations with stakeholders across Europe have shown broad and strong support for 
this objective, on manifold grounds: 

  Embracing  digital  finance  would  unleash  innovation  and  create  opportunities  to 
develop  better  financial  products  for  consumers  including  for  people  currently 
unable to access financial services.  It unlocks new ways of channelling funding to 
EU businesses, in particular SMEs. 

  Boosting  digital  finance  would  therefore  support  Europe’s  economic  recovery 
strategy and the broader economic transformation. It would open up new channels 
to mobilise funding in support of the Green Deal and the New Industrial Strategy 
for Europe. 

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  As digital finance cuts across borders, it also has the potential to enhance financial 
market  integration  in  the  Banking  Union  and  the  Capital  Markets  Union11  and 
thereby to strengthen Europe’s Economic and Monetary Union. 

  Finally,  a  strong  and  vibrant  European  digital  financial  sector  would    strengthen 
Europe’s ability to retain and reinforce our open strategic autonomy in financial 
services and, by extension, our capacity to regulate and supervise the financial system 
to protect Europe’s financial stability and our values. 

To achieve this strategic objective, the next section presents four priorities that will guide our 
actions for the remainder of this mandate and a set of accompanying measures. 

4.  Four priorities for the digital transformation of the EU financial sector 

In light of the trends and objectives outlined above, and as supported by the vast majority of 
respondents  participating  in  the  public  consultation  underpinning  this  strategy,12  four 
priorities will guide EU actions to promote digital transformation up to 2024.  

The  first  priority  is  to  tackle  fragmentation  in  the  Digital  Single  Market  for  financial 
services,  thereby    enabling  European  consumers  to  access  cross-border  services  and 
help  European financial  firms’  scale  up  their digital  operations  (4.1).  Many  firms  have 
confirmed  that  scaling  up  across  borders  is  essential  for  them,  because  on-line  services  are 
costly to develop but cheap to reproduce and often require deployment at considerable scale. 
A larger potential market across borders makes it easier to raise the funds needed to develop 
such  services.  It  gives  consumers  genuine  access  to  cross  border  services.  Firms  achieving 
scale may also be able to provide such services at a lower price and higher quality. 

The  second  priority  is  to  ensure  that  the  EU  regulatory  framework  facilitates  digital 
innovation in the interest of consumers and market efficiency (4.2). Innovations based on 
or making use of distributed ledger technology (DLT) or artificial intelligence (AI) have the 
potential  to  improve  financial  services  for  consumers  and  businesses.  The  regulatory 
framework for financial services should ensure that they are used in a responsible way, in line 
with EU values. More broadly, faster, more open and collaborative innovation cycles call for 
regular examination of and adjustments to EU financial services legislation and supervisory 
practices, to ensure that they support digital innovation and remain appropriate and relevant 
in evolving market environments.  

The third priority is to create a European financial data space to promote data-driven 
innovation, building on the European data strategy, including enhanced access to data 
and data sharing within the financial sector (4.3).13 The EU has  ensured that companies 
including  financial  firms  publish  comprehensive  financial  and  non-financial  information  on 

11 Communication from the Commission to the European Parliament, the Council, the European Economic and 
Social Committee and the Committee of the Regions - A Capital Markets Union for people and businesses-new 
action plan, COM(2020)590 
12 https://ec.europa.eu/info/consultations/finance-2020-digital-finance-strategy_en 
13  Communication from the Commission to the European Parliament, the European Council, the Council, the 
European  Economic  and  Social  Committee  and  the  Committee  of  the  Regions  on  A  European  Data  Strategy, 
COM(2020) 66 final, 19.02.2020 

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their  operations  and  products.  It  has  also  led  the  way  in  opening  up  the  sharing  of  data  on 
payments accounts as part of the revised Payment Services Directive. Further steps towards 
enhanced  data  sharing  and  openness  across  and  within  sectors,  in  compliance  with    data 
protection and competition rules, will enable the financial sector to fully embrace data-driven 
innovation.  This  will  encourage  the  creation  of  innovative  products  for  consumers  and 
businesses, and will support broader policy objectives, such as the as the creation of a single 
market for data. It will also contribute to facilitating access to data needed to channel funding 
in support of sustainable investments. 

The  fourth  priority  is  to  address  new  challenges  and  risks  associated  with  the  digital 
transformation  (4.4).  Financial  services  migrate  to  digital  environments  with  fragmented 
ecosystems,  comprising  interconnected  digital  service  providers  falling  partially  outside 
financial regulation and supervision. Digital finance may therefore make it more challenging 
for  the  existing  regulatory  and  supervisory  frameworks  to  safeguard  financial  stability, 
consumer  protection,  market  integrity,  fair  competition  and  security.  To  ensure  that  digital 
finance’s enable better financial products  for  consumers  and businesses these risks must be 
addressed.    The  Commission  will  therefore  pay  particular  attention  to  the  principle  “same 
activity,  same  risk,  same  rules”,  not  least  to  safeguard  the  level  playing  field  between 
existing financial institutions and new market participants.  

Across these four priorities, the Commission will pay particular attention to  promoting the 
new opportunities that digital finance offer to consumers and to protecting consumers 
wherever appropriate. This will notably be in due compliance with data protection rules, in 
particular the General Data Protection Regulation14 (GDPR).  

The  Commission  also  remains  committed  to  continue  working  closely  with  our 
international  partners,  since  the  benefits  of  digital  finance  are  best  harnessed  if  their 
deployment is based on international principles and standards.  

4.1.Removing fragmentation in the Digital Single Market 

The  digital  finance  strategy  is  designed  to  build  on  the  opportunities  offered  by  the  Single 
Market,  to  offer  consumers  and  firms  the  benefits  of  digital  financial  services.  A  well-
functioning Single Market for digital financial services will help improve access to financial 
services for consumers and retail  investors in  the EU through more innovative, diverse and 
inclusive banking, investment and insurance services.  

  Enabling EU-wide interoperable use of digital identities 

By  2024,  the  EU  should  implement  a  sound  legal  framework  enabling  the  use  of 
interoperable  digital  identity  solutions  which  will  enable  new  customers  to  access 
financial services quickly and easily (“on boarding”). This framework should be based 
on  more  harmonised  anti-money  laundering  (AML)  and  counter-terrorism  financing 
(CTF) rules and a revised framework for electronic identification and trust services for 

14 Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection 
of natural persons  with regard to the processing of personal data  and on the free movement of such data, and 
repealing Directive 95/46/EC (General Data Protection Regulation) 

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electronic  transactions  (e-IDAS  Regulation)15.  It  should  enable  customer  data  to  be 
reused subject to informed customer consent, which is based on full transparency about 
the consequences and implications of such reuse.  

The recent lockdown has highlighted just how essential digital financial services that function 
smoothly are for consumers and businesses interacting remotely. However, much more needs 
to  be  done  before  remote  ‘on-boarding’  of  financial  services  will  work  effectively  and 
seamlessly. This needs to work both in domestic and cross-border settings, in full compliance 
with AML/CTF requirements and with a view to facilitating compliance with other regulatory 
on-boarding  requirements,  for  example  to  assess  a  customer’s  suitability  for  certain 
investment products. The Commission will facilitate financial service providers’ safe remote 
on-boarding of customers across the EU in three steps. 

First,  the  Commission  is  today  inviting  the  European  Banking  Authority  (EBA)  to  develop 
guidelines  in  close  coordination  with  the  other  European  Supervisory  Authorities  by  Q3 
2021. These aim to ensure greater convergence on the elements related to identification and 
verification  needed  for  on-boarding  purposes,  and  on  the  manner  and  extent  to  which 
financial  service  providers  are  allowed  to  rely  on  customer  due  diligence  (CDD)  processes 
carried  out  by  third  parties,  including  other  financial  service  providers.  In  parallel,  the 
Commission will engage with the European Data Protection Board (EDPB) to clarify all data 
protection aspects in the context of reusing ‘on-boarding’ information for other purposes (e.g. 
‘on-boarding’ with another provider, access to other non-banking services).  

Second, as  part of the upcoming legislative proposals for a new AML/CTF framework, the 
Commission  will  further  define  and  harmonise  CDD  requirements  to  facilitate  the  use  of 
innovative  technologies  and  allow  for  seamless  cross-border  operation,  without  the  need  to 
apply different processes or comply with additional requirements in each Member State. This 
will  make  it  easier  to  identify  customers  and  check  their  credentials  ),  while  ensuring  full 
compliance  with  the  AML/CTF  risk-based  approach.  For  instance,  this  could  be  done  by 
stating  what  ID  documents  are  needed  to  establish  a  person’s  identity,  and  by  clarifying 
which technologies can be used to check ID remotely. The Commission review of AML/CTF 
rules will also aim to propose:  

 

 

 

improving and clarifying access to data to enhance financial service providers’ ability 
to authenticate the identity of the customer;  
further  specifying,  by  means  of  technical  standards,  aspects  relating  to  detailed 
identification and authentication elements for on-boarding purposes; and  
further developing, by means of technical standards, reliance on third parties to meet 
CDD  requirements,  including  issues  associated  with  liability  ,  transparency  and 
ethical use.  

These technical standards would build on the EBA guidelines mentioned under the first point. 

Finally,  as  part  of  the  planned  review  of  the  e-IDAS  Regulation,  the  Commission  is 
considering  improving  its  effectiveness,  extending  its  application  to  the  private  sector  and 
promoting  trusted  digital  identities  for  all  Europeans.  The  revision  of  the  Regulation  will 

15 Regulation (EU) No 910/2014 on electronic identification and trust services for electronic transactions in the 
internal market and repealing Directive 1999/93/EC, OJ L 257, 28.8.2014, p. 73–114. 

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provide  a  future-proof  regulatory  framework  supporting  an  EU-wide,  simple,  trusted  and 
secure system for managing identities in the digital space. 

Building on these measures and in the context of its work on open finance (see section 4.3), 
the Commission intends to enable the integration of further elements so that digital identities 
can be used, for example, for ‘on-boarding’ with another financial institution. This could for 
example include elements linked to investor suitability or customer credit profile. 

  Facilitating the scaling up of digital financial services across the Single Market 

By 2024, the principle of passporting and a one-stop shop licensing should apply in all 
areas  which  hold  strong  potential  for  digital  finance.  Firms  should  be  able  to  rely  on 
close  cooperation  between  national  supervisory  innovation  facilitators  within  the 
European  Forum  of  Innovation  Facilitators  (EFIF),  and  a  new  EU  digital  finance 
platform.  

A long-standing principle in the single market is that consumers and businesses should have 
genuine  access  to  cross-border  services  provided  by  firms  established  and  supervised  in 
another  Member  State  in  line  with  commonly  agreed  rules  (“passporting”).  Any  remaining 
obstacles  to  cross-border  provision  of  such  services  should  be  particularly  low  for  digital 
services. However, as highlighted by many respondents to the public consultation, EU fintech 
firms often can only provide services only within their own country or restrict access to their 
digital platforms to customers located in a limited list of EU jurisdictions. The main reasons 
for  that  are  that  regulatory  framework  differs  from  country  to  country  ,  entailing 
disproportionate compliance costs for operators active in several countries. 

The  Commission  is  amending  the  regulatory  framework  to  introduce  the  possibility  of 
passporting in key areas relevant to digital finance. The Crowdfunding Regulation, agreed by 
the co-legislators in December 2019 will introduce common rules and passporting for various 
types  of  crowdfunding  services,  including  credit  intermediation,  and  today’s  Commission 
proposals  on  crypto-assets  will  propose  common  rules  and  passporting  for  crypto-asset 
issuers  and  service  providers.  The  Commission  will  also  consider  the  relevance  of 
passporting in other areas, for example in the context of examining the prudential regulation 
of non-bank lending, with due attention to consumer protection rules (see section 4.4 below). 
It will also examine possible ways to enable the certification of technical solutions designed 
to  help  firms  meeting  their  regulatory  compliance  obligations  (“RegTech”16),  support 
common approaches in that field, including interoperability. At the same time, the practical 
application of passporting requires close cooperation between home and host supervisors to 
ensure that  commonly  agreed  rules are enforced and applied  consistently. The Commission 
encourages the European Supervisory Authorities (ESAs) to continue and step up their work 
to promote cooperation and supervisory convergence. 

The  retail  payments  strategy  furthermore  sets  out  how  the  Commission  intends  to  tackle  a 
number of specific regulatory issues in the area of payments, such as existing practices where 
foreign IBAN account numbers are refused (“IBAN discrimination”). 

16 RegTech: Regulatory Technology is a sub-set of FinTech that focuses on technologies that may facilitate the 
delivery of regulatory requirements more efficiently and effectively than existing capabilities 

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Responses to the consultation also show that stakeholders continue to attach great importance 
to  the  work  of  supervisory  innovation  facilitators,  such  as  innovation  hubs  and  regulatory 
sandboxes,  also  in  a  cross-border  context.  The  Commission  will  work  with  the  ESAs  to 
strengthen the innovation network provided by the European Forum of Innovation Facilitator 
(EFIF)17.  It  will  also  promote  national  innovation  facilitators,  e.g.  through  the  structural 
reform  support  programme18.  In  particular,  the  Commission  will  work  with  the  EFIF  to 
ensure that it offers by mid-2021 a procedural framework for launching cross-border testing 
and other mechanisms facilitating firms’ interaction with supervisors from different Member 
States.  

To  encourage  cooperation  between  private  and  public  stakeholders,  the  Commission,  in 
cooperation with EFIF, will establish a new EU digital finance  platform.  The new platform 
will  serve  as  a  channel  to  interact  online  and  on  an  ongoing  basis  with  this  new  digital 
finance  ecosystem  building  on  the  positive  feedback  received  after  the  digital  finance 
outreach. It will also offer an interface to the EFIF and to national innovation facilitators and 
national e-licensing procedures. Going forward, it could be developed into a broader platform 
for cooperation and a data space that could be used by industry or supervisory authorities to 
test  innovation.  The  platform  will  be  designed  to  be  eligible  for  potential  funding  from  the 
digital  Europe  programme  which  will  support  the  roll–out  of  collaboration  platforms  for 
mainstreamining digital technologies..  

Supervising  digital  finance  requires  enhanced  cooperation  between  various  authorities.  The 
EFIF will therefore involve representatives from, for example, the European Data Protection 
Board  (EDPB),  the  Commission  services  responsible  for  competition  enforcement,  and 
relevant national authorities beyond the financial  sector. They will attend EFIF meetings as 
observers, to discuss the challenges raised by innovative business models combining financial 
and non-financial services. 

Supervising digital finance requires significant new skills. The Commission will continue to 
help  upgrade  supervisors’  technical  skills,  including  through  the  EU  Fintech  Lab19.  The 
Commission  also  stands  ready  to  design  targeted  assistance  programmes  with  national 
authorities.  This  could  for  example  be  done  through  the  structural  reform  support 
programme20.   

Key actions    

The  Commission  will  propose  in  2021  as  part  of  a  broader  initiative  on  AML/CFT  to 
harmonise rules on customer onboarding and will build on the upcoming review of e-IDAS to 
implement an interoperable cross-border framework for digital identities. 

17  The  EFIF  was  established  further  to  the  January  2019  Joint  ESA  report  on  regulatory  sandboxes  and 
innovation  hubs  which  identified  a  need  for  action  to  promote  greater  coordination  and  cooperation  between 
innovation facilitators to support the scaling up of FinTech across the single market 
18 The structural reform support programme (SRSP) is an EU programme that provides tailor-made support to 
all EU countries for their institutional, administrative and growth-enhancing reforms  
19  The  EU  FinTech  Lab  was  established  under  the  2018  FinTech  action  plan  and  gathers  service  providers, 
financial institutions and supervisors to deep dive into specific technologies or applications. 
20 The structural reform support programme (SRSP) is an EU programme that provides tailor-made support to 
all EU countries for their institutional, administrative and growth-enhancing reforms  

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The  Commission  will  explore  the  need  to  introduce  additional  harmonised  licensing  and 
passporting  regimes,  work  with  the  ESAs  to  strengthen  EFIF,  and  establish  an  EU 
digital finance platform to foster cooperation between private and public stakeholders.  

4.2. Adapting the EU regulatory framework to facilitate digital innovation 

The purpose of the digital finance strategy is to ensure that the EU regulatory framework for 
financial  services  is  fit  for  the  digital  age.  This  includes  enabling  the  use  of  innovative 
technologies and making the framework compatible with prevailing best practice in software 
production and deployment. Many respondents to the public consultation took the view that 
EU rules should be more technology neutral and innovation friendly, and should be able to 
adjust  to  innovations  more  rapidly,  while  continuing  to  respect  all  the  rules  ensuring  their 
safe and secure functioning and user protection. 

  Enabling EU markets in crypto-assets and tokenised financial instruments 

By 2024, the EU should put in place a comprehensive framework enabling the uptake of 
distributed ledger technology (DLT) and crypto-assets in the financial sector. It should 
also address the risks associated with these technologies. 

Crypto-assets and their associated blockchains can bring significant opportunities in finance: 
international 
potentially  cheap  and  fast  payments,  especially  for  cross-border  and 
transactions, new funding possibilities for SMEs and more efficient capital  markets. Utility 
tokens  can  serve  as  enablers  of  decentralised  blockchain  networks  and  stablecoins  can 
underpin  machine-to-machine  payments  in  mobility,  energy  and  manufacturing  sectors. 
However, they also involve risks, and should therefore be properly regulated and supervised. 

The Commission is today presenting a legislative proposal21 to accompany this strategy. The 
proposal  clarifies  the  application  of  existing  EU  rules  to  crypto-assets,  introduces  a  pilot 
regime for crypto-assets covered by these rules and establishes a new EU legal framework for 
crypto-assets  that  are  not  covered  by  these  rules,  based  on  a  taxonomy  of  definitions  of 
different  types  of  crypto-assets.  The  latter  includes  utility  tokens  and  dedicated  rules  to 
regulate the particular risks for financial stability and monetary sovereignty linked to asset-
referenced  tokens  (also  known  as  ‘stablecoins’)  used  for  payment  purposes.  Additional 
interpretative  guidance  on  the  application  of  existing  rules  will  improve  regulatory  clarity, 
enabling the financial sector to reap efficiency gains through wider use of distributed ledger 
technology (DLT) in capital markets, while continuing to respect the safety and security rules 
and maintaining a high level of user protection.  

At  the  same  time,  in  light  of  ongoing  work  carried  out  by  the  Basel  Committee,  the 
Commission  will  consider  updating  the  prudential  rules  for  crypto-assets  held  by  financial 

21  Proposal  for  a  Regulation  of  the  European  Parliament  and  of  the  Council  on  Markets  in  Crypto-assets  and 
amending  Directive  (EU)  2019/1937,  COM(2020)  593  and  proposal  for  a  Regulation  of  the  European 
Parliament  and  of  the  Council  on  a  Pilot  Regime  for  market  infrastructures  based  on  distributed  ledger 
technology - COM(2020)594 

9 

 
 
 
                                                           
firms.  The  Commission  will  also  explore  how  to  leverage  DLT  to  improve  capital-raising 
operations of SMEs.  

Digital  technologies  also  hold  potential  for  central  banks  to  develop  central  bank  digital 
currencies as a digital alternative to cash and a catalyst for continued innovation in payments, 
ﬁnance and commerce. As detailed in the retail payments strategy, the Commission supports 
the work of central banks, and in particular, the ECB, to consider issuing a retail central bank 
digital currency (CBDC) available to the general public, while safeguarding the legal tender 
of euro cash.  

Finally, to encourage the development of and investment in low or zero emission DLT and 
the  Internet  of  Things,  the  Commission,  working  with  the  platform  on  sustainable  finance, 
will aim to integrate these sectors by 2021 in the sustainable finance taxonomy.  

  Promoting cooperation and the use of cloud computing infrastructure 

Cloud computing makes it far easier to scale up rapidly and flexibly and to shift to a modular 
IT architecture that promotes cooperation and fits best with cloud-native digital applications. 
To facilitate this and ensure that EU banks and financial services can reap the benefits offered 
by the use of cloud services in a highly secure customer-facing environment, the Commission 
is  today  proposing  an  oversight  framework  for  critical  third-party  ICT  providers  to  the 
financial  sector22,  such  as  cloud  service  providers.  In  the  context  of  a  highly  concentrated 
market,  the  Commission  proposed  in  the  EU  data  strategy  to  launch  a  European  cloud 
services marketplace, integrating the full stack of cloud service offering by the end of 2022. 
This marketplace will facilitate access to alternative cloud service providers, including in the 
financial sector.  

The Commission will also support cooperation through a further shift towards activity-based 
regulation  (see  section  4.4  below).  Other  cloud  policy  measures  that  aim  at  increasing 
competition  and  market  fluidity,  building  on  the  already  available  self-regulatory  codes  of 
conduct developed by the industry as regards switching cloud service providers and porting 
data  are  expected  to  foster  cloud  adoption  in  the  financial  sector.  The  Commission  has 
requested  the  EU  cybersecurity  agency  (ENISA)  to  develop  a  cybersecurity  certification 
scheme for cloud services in conformity with the Cybersecurity Act, which will support trust 
in  cloud  use,  notably  by  financial  services  and  regulators.  Further  action  may  include 
measures on how to facilitate the migration towards a modular IT architecture and to allow 
for collaboration with other players. Such relationships could also be nurtured as part of the 
EU Digital Finance platform (see section 4.1 above), bringing together incumbents and new 
market entrants.  

  Promoting investments in software by adapting prudential rules on intangible assets 

Digital transformation requires significant investments in software by the financial industry. 
Currently, the prudential treatment of software investments differs across jurisdictions, with 

22 Proposal for a Regulation of the European Parliament and the Council on digital operational resilience for the 
financial  sector  and  amending  Regulations  (EC)  No  1060/2009,  (EU)  No  648/2012,  (EU)  No  600/2014  and 
(EU) No 909/2014 - COM(2020)595 

10 

 
 
                                                           
 
European banks facing more stringent capital requirements  than  banks in other jurisdictions. 
In order to facilitate the transition towards a more digitalised banking sector, the Commission 
will shortly adopt regulatory technical standards currently being developed by the EBA.  

  Promoting the uptake of artificial intelligence tools 

By  2024,  the  Commission,  working  together  with  the  ESAs,  aims  to  ensure  clarity  as 
regards    supervisory  expectations  about  how  the  legislative  framework  on  financial 
services should apply to artificial intelligence (AI) applications.     

The essential promise of the latest AI tools is that they make prediction more accessible. This 
should help firms save on costs. Also,  as prediction technology becomes more accurate and 
reliable over time, it may lead to more productive business models and new ways to compete. 
On the consumer side, the use of AI applications could make it possible for firms to provide 
better  and  more  tailored  services  at  lower  cost.  In  some  cases,  it  could  also  enable  people 
previously excluded from financial services to access them.  

As set out in the White Paper on artificial intelligence, the Commission will promote the use 
of AI by proposing significant investments at EU level and put forward a new AI regulatory 
framework reflecting our European values.  

The  overwhelming  majority  of  participants  to  the  public  consultation  felt  that  the  EU 
financial sector needed guidance at EU level on the use of AI applications in finance and their 
regulatory  treatment.  The  financial  industry  referred  to  the  lack  of  legal  clarity  about  the 
impact  of  EU  rules  in  this  context.  Customers  mentioned  the  lack  of  understanding  and 
transparency  about  how  a  particular  outcome  is  obtained,  fearing  biases  and  exploitative 
profiling,  as  well  as  difficulties  in  contesting  AI-based  outcomes.  Supervisory  authorities 
referred to the lack of expertise and clarity on how specific EU rules need to be applied (e.g. 
as regards explainability of AI models).  

As a result, the Commission will invite the ESAs and the ECB to explore the possibility of 
developing regulatory and supervisory guidance on the use of AI applications in finance. This 
guidance  should  follow  the  upcoming  proposal  for  a  new  regulatory  framework  for  AI 
planned in 2021. The European supervisory authorities will also rely on the work they have 
recently initiated in this area, including advice by the Expert Group on Digital Ethics set up 
by the European Insurance and Occupational Pensions Authority. The European supervisory 
authorities should aim to ensure clarity on supervisory expectations and mitigation of risks, 
so  that  AI-based  solutions  can  be  applied  in  the  EU  financial  sector  in  a  safe,    sound  and 
ethical  manner.  As  regards  more  general  challenges  related  to  the  use  of  AI  tools  in 
compliance  with  GDPR23,  or  risks  of  collusive  behaviour  by  means  of  price-adjusting  AI 
tools, these will feed into the follow-up process to the Commission’s AI White Paper. 

  Ensuring a future proof legislative framework on an on-going basis 

The Commission aims to ensure through regular legislative reviews and interpretative 
guidance that the EU regulatory framework for financial services neither prescribes nor 

23 The consultation highlighted many issues where efficient use of AI tools could be inhibited by such GDPR 
principles as data anonymity, the right to be forgotten, rights with respect to automated decision-making rules, 
data minimisation and purpose limitation.  

11 

 
 
                                                           
prevents  the  use  of  particular  technologies  while  also  ensuring  that  regulatory 
objectives continue to be met.  

Regulatory  uncertainty  hampers  innovation  in  finance,  and  can  also  harm  consumers  or 
investors. In addition to the key issues raised in this strategy, the Commission will integrate 
aspects of digital finance in all upcoming legislative reviews, wherever relevant.  

As digital innovation advances, new regulatory questions are likely to arise. The Commission 
will regularly carry out a Digital Finance Outreach to identify emerging issues. On that basis, 
it  will    provide  guidance  on  the  interpretation  of  the  EU  regulatory  framework  through 
regular interpretative communications. The first interpretative communication to be issued in 
2021  will  ensure  additional  clarity  on  the  treatment  of  crypto-assets,  complementing  the 
relevant Commission legislative proposals. 

Key actions     

The  Commission  is  proposing  today  a  new  EU  legislative  framework  for  crypto-assets, 
including asset-referenced tokens (also known as ‘stablecoins’) and utility tokens. 

Through  regular  reviews,  the  Commission  will  ensure  that  potential  material  regulatory 
obstacles to innovation stemming from legislation on financial services are removed. It will 
regularly provide interpretative guidance on how existing legislation on financial services 
is to be applied to new technologies. 

4.3.  Promoting data-driven innovation in finance by establishing a common financial 

data space 

In its new data strategy for Europe24, the Commission highlighted the need for better access 
to data and data sharing within the EU, creating broader access to public and private data to 
the benefits of people, businesses and the broader public interest. As part of these efforts, and 
in  close  connection  with  activities  across  other  sectors,  the  Commission  aims  to  set  up  a 
common  financial  data  space  through  a  number  of  more  specific  measures  set  out  in  this 
section. The Commission’s  objective is to help integrate European capital markets, channel 
investments  into  sustainable  activities,  support  innovation  and  bring  efficiencies  for 
consumers  and  businesses.  The  Commission  will  set  up  a  group  of  data  experts  in  close 
cooperation  with  the  ESAs  to  provide  advise  on  the  technical  aspects  of  establishing  a 
common financial data space. 

  Facilitating real-time digital access to all regulated financial information 

By  2024,  information  to  be  publically  released  under  EU  financial  services  legislation 
should be  disclosed in standardised and machine-readable formats. As part of its CMU 
Action Plan, the Commission will implement EU infrastructure to facilitate access to all 
publicly available disclosure relevant to capital markets. 

24  Communication from the Commission to the European Parliament, the European Council, the Council, the 
European Economic and Social Committee and the Committee of the Regions on A European Data Strategy, 
COM(2020) 66 final, 19.02.2020 

12 

 
 
                                                           
Financial institutions are currently required to make a wealth of financial information public. 
In a digital context, the Commission intends to ensure that regulated information is provided 
in  electronic  machine-readable  formats.  As  regards  public  disclosure,  the  Commission 
intends to ensure that financial information already made available publically by companies 
through  national  registers  is  considered  as  high  value  data  sets  in  the  context  of  the  Open 
Data Directive. In addition, starting with the proposal on crypto assets, the Commission will 
propose  legislative  amendments  to  EU  financial  services  legislation  requiring  public 
disclosure to be made systematically available in machine-readable formats. In the context of 
the  Capital  Markets  Union,  the  Commission  will  support  the  development  of  an  EU 
infrastructure  and  interoperability  to  facilitate  access  to  all  publicly  available  disclosures. 
This infrastructure will be designed to be eligible for potential funding from the new digital 
Europe programme, which will support the development of EU digital capacities to advance 
the take up of and accessibility to new technologies. 

  Promoting innovative IT tools to facilitate reporting and supervision 

By  2024,  the  EU  aims  to  put  in  place  the  necessary  conditions  to  enable  the  use  of 
innovative  technologies,  including  RegTech25  and  SupTech26  tools,  for  supervisory 
reporting  by  regulated  entities  and  supervision  by  authorities.  It  should  also  promote 
the  sharing  of  data  between  supervisory  authorities.  Building  on  the  outcomes  of  the 
fitness  check  of  supervisory  reporting  requirements27,  the  Commission,  together  with  the 
ESAs will develop a strategy on supervisory data in 2021 to help ensuring that (i) supervisory 
reporting  requirements  (including  definitions,  formats,  and  processes)  are  unambiguous, 
aligned,  harmonised  and  suitable  for  automated  reporting,  (ii)  full  use  is  made  of  available 
international  standards  and  identifiers  including  the  Legal  Entity  Identifier,  and  (iii) 
supervisory  data  is  reported  in  machine-readable  electronic  formats  and  is  easy  to  combine 
and process. This will facilitate the use of RegTech tools for reporting and SupTech tools for 
data analysis by authorities. 

The Commission also aims to ensure that key parts of EU regulation are accessible to natural 
language  processing,  are  machine  readable  and  executable,  and  more  broadly  facilitate  the 
design  and  implementation  of  reporting  requirements.  It  will  also  encourage  the  use  of 
modern IT tools for information sharing among national and EU authorities. As a first step in 
the  domain  of  machine  readable  and  executable  reporting,  the  Commission  has  launched  a 
pilot project for a limited set of reporting requirements. 

  Promoting  business-to-business  data  sharing  in  the  EU  financial  sector  and  beyond 

(open finance) 

By 2024, the EU should have an open finance framework in place, in line with the EU 
Data  Strategy,  the  upcoming  Data  Act,  and  Digital  Services  Act.  This  will  be 
coordinated with the review of the Payment Services Directive. 

25 RegTech: Regulatory Technology is a sub-set of FinTech that focuses on technologies that may facilitate the 
delivery of regulatory requirements more efficiently and effectively than existing capabilities 
26  SupTech:  Supervisory  Technology  is  a  sub-set  of  FinTech  that  uses  of  innovative  technology  to  support 
supervision. It helps supervisory authorities to digitise reporting and regulatory processes 
27 https://ec.europa.eu/info/consultations/finance-2017-supervisory-reporting-requirements_en 

13 

 
 
                                                           
The  revised  Payment  Services  Directive  (PSD2)  marked  an  important  step  towards  the 
sharing and use of customer-permissioned data by banks and third party providers to create 
new  services  (“open  finance”).  The  Commission  will  launch  the  review  of  the  Payment 
Services Directive in 2021, including an assessment of its scope.  

Open finance can lead to better financial products, better targeted advice and improved access 
for  consumers  and  greater  efficiency  in  business-to-business  transactions.  Access  to  more 
customer  data  would  also  enable  service  providers  to  offer  more  personalised  services  that 
are  better  tailored  to  customers’  specific  needs.  A  balanced  regulatory  framework  for  the 
sharing of data on financial products will support the financial sector in fully embracing data-
driven  finance,  and  effectively  protect  data  subjects,  who  must  have  full  control  over  their 
data. 

The Commission will therefore propose legislation on a broader open finance framework by 
mid-2022.  It  will  build  on  the  upcoming  initiative  focusing  on  data  access,  including  the 
upcoming Data Act, and the Digital Services Act28. The Commission is already reviewing its 
competition  policy  to  ensure  that  it  is  fit  for  the  digital  age29.  In  this  context,  it  will  also 
determine whether sector-specific measures are needed to ensure fair access to platforms for 
all financial service providers. As announced in the retail payments strategy, the Commission 
will  explore  initiatives  at  EU  level  to  address  the  current  issues  faced  by  payment  services 
providers  when  trying  to  access  near  field  communication  (NFC)  antennas  available  on 
certain  mobile  platforms  (such  as  phones  or  tablets)  and  used  for  effective  contactless 
payments. The open finance framework will also build on the initiatives on digital identities 
mentioned above.  

Key actions    

The Commission will amend EU legislation to ensure that publicly disclosed information is 
available  in  standardised  and  machine-readable  formats,  and  will  set  up  an  EU-funded 
infrastructure for public disclosure.  

The Commission will present a strategy on supervisory data in 2021. 

The Commission will present a legislative proposal for a new open finance framework by 
mid-2022, building on and in full alignment with broader data access initiatives. 

4.4. Addressing the challenges and risks associated with digital transformation 

The digital transformation of the financial sector is not without challenges and risks, some of 
which are transversal  in  nature due to  the digital environment  itself, whilst  others are more 
specific to the individual policy initiatives set out above.  

28 https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12417-Digital-Services-Act-
deepening-the-Internal-Market-and-clarifying-responsibilities-for-digital-services 
29 The Commission is currently reviewing the rules applicable to horizontal and vertical agreements, as well as 
the Market Definition Notice. Moreover, in June 2020 the Commission launched a public consultation in order 
to assess whether a New Competition Tool may be required in order to  address structural competition problems 
that  current  competition  rules  cannot  tackle  in  the  most  efficient  manner.  More  information  on  these  review 
processes 
for  Competition: 
for 
found 
https://ec.europa.eu/competition/consultations/open.html 

the  Directorate  General 

the  website 

can 

be 

in 

14 

 
 
 
                                                           
  Safeguarding financial stability, protecting investors and consumers, based on the 

“same activity, same risk, same rules” principle 

By 2024, the EU prudential and conduct regulation and supervision should be adapted 
to  be  future  proof  for  the  new  financial  ecosystem,  including  traditional  regulated 
financial institutions and technology providers offering financial services. 

Technology companies – large and small – are increasingly entering financial services, either 
directly  or  indirectly.  While  many  technology  providers  are  now  offering  payments  and 
related  services,  respondents  to  the  Commission’s  public  consultation  expect  that  online 
provision  of  other  financial  services,  such  as  loans,  insurance,  and  asset  management  for 
consumers  and  businesses  develops  further.  Large  technology  companies  also  often  act  as 
intermediaries by bundling various services and products with associated financial services, 
such  as  payments,  financing  or  insurance  and  thus  become  marketplaces  for  financial 
services.  They  can  scale  up  financial  services  quickly  across  their  large  user  bases  and 
radically change market structures, sometimes adversely affecting competition. Finally, large 
technology companies also provide many of the digital technology solutions that are used in 
the  provision  of  financial  services,  including  hardware,  software  and  cloud-based  solutions 
for the financial industry.  

Technology  companies  are  therefore  likely  to  become  an  integral  part  of  the  financial 
ecosystem,  and  most  respondents  to  the  public  consultation  expect  risks  to  increase  as  a 
consequence.  It  is  important  to  address  all  these  risks,  not  only  those  affecting  customers 
(policy-holders,  investors  and  depositors)  but  also  broader  financial  stability  issues  and 
competition  in  financial  services  markets.  Such  issues  are  significant  both  as  regards 
technology  companies’  provision  of,  and  consumers  and  businesses’  access  to,  financial 
services,  as  well  as  the  potential  spill-over  effects  between  the  financial  and  non-financial 
parts  of  mixed  groups.  In  this  context,  regulation  and  supervision  should  be  proportionate, 
based on the principle of “same activity, same risk, same rules” and pay particular attention 
to the risks of significant operators.  

Furthermore, technology is contributing to breaking up previously integrated value chains for 
a given financial service. While most financial services have traditionally been offered by one 
provider, digital technologies have made it possible for firms to specialise in a particular leg 
in the value chain. This increases competition and may improve efficiency. However, it also 
makes value chains more complex, making it harder for supervisors to have an overview of 
the  risks  in  the  value  chain,  especially  if  the  entities  involved  are  subject  to  different 
regulatory and supervisory frameworks. 

The Commission will, where necessary, adapt the existing conduct and prudential EU legal 
frameworks so as to continue safeguarding financial stability and protecting customers in line 
with  the  “same  activity,  same  risk,  same  rules”  principle.  The  Commission  will  cooperate 
with the ECB, national central banks and competent authorities in this process as appropriate. 

First,  as  set  out  in  the  Retail  Payments  Strategy,  the  Commission  will  review  the  Payment 
Services Directive and the E-Money Directive. 

Second, it will assess how to ensure comprehensive supervision of the more fragmented value 
chains and the new providers of financial services. One possibility, included in the proposal 
on crypto assets presented alongside this strategy, is to establish a supervisory college for the 

15 

 
 
ecosystem  of  a  given  financial  services  value  chain.  This  would  improve  cooperation  and 
ensure that no risk is ignored. 

Third, the Commission will explore ways to ensure that the prudential supervisory perimeter 
is  broad  enough  to  capture  risks  arising  from  platforms’  and  technology  firms’  financial 
services provision and from techno-financial conglomerates and groups. To that end, it will 
review whether provisions on group supervision in EU financial services legislation, such as 
the  Financial  Conglomerates  Directive  (FICOD),  have  a  sufficiently  broad  and  flexible 
institutional scope to adapt to a constantly changing financial market structure regardless of 
the  corporate  structure  and  the  group’s  main  activities.  The  supplementary  supervision  of 
group  risks  entailed  by  FICOD  could  also  be  one  way  to  beef  up  cooperation  between 
sectoral supervisors so as to have a general overview of bundled financial services offered by 
various providers.  

Fourth, the Commission is considering the need for legislative proposals to address potential 
risks  stemming  from  potential  large-scale  lending  operations  by  firms  outside  the  banking 
perimeter, which may entail both micro and macro-prudential risks.  

To  prepare  these  actions,  the  Commission  is  requesting  advice  from  the  European 
supervisory authorities on how to address “same activity, same risk, same rules” issues, more 
fragmented value chains, the scope of the supervisory perimeter and prudential risks related 
to non-bank lending, and will decide on the necessary legislative amendments by mid-2022.  

  Protecting consumers and the public interest 

The EU must integrate into all measures taken to implement this strategy the objective 
of continuously empowering and protecting consumers to ensure that they benefit from 
a  broader  access,  under  safe  conditions,  to  innovative  products  and  services.  The 
protection  of  the  public  interest  against  the  risk  of  money  laundering,  terrorist 
financing and any other financial misbehaviours including tax evasion should progress 
in parallel. 

In a digital world, consumers and investors can access a greater range of financial services, 
including cheaper and more innovative services. Interoperable digital identities will  make it 
easier  to  access  these  products  remotely  and  across  borders.  At  the  same  time,  there  was  a 
broad consensus among those who took part to the public consultation that with technology 
companies  gaining  market  share  in  financial  services,  consumers  will  face  additional  risks, 
which could include the unwanted consequences of a potential reduction in competition.  

The  Commission  will  integrate  the  objective  of  facilitating  consumers’  access  to  financial 
services, while addressing the risks for them, into the implementation of all elements of this 
strategy.  A  new  framework  for  safe  remote  identification  referred  to  in  section  4.1,  easier 
access to public disclosures and a new open finance framework referred to in section 4.3 are 
particularly important in this respect.  

The Commission will assess whether and how the customer protection and conduct aspects of 
a number of items of EU legislations can be improved to take account of new, digital ways of 
providing financial services. The sectoral financial services framework includes a number of 
consumer  and  personal  data  protection  rules,  including  rules  on  conduct  of  business, 

16 

 
 
information  disclosure,  credit  worthiness  or  advice.  The  Distance  Marketing  of  Financial 
Services Directive sets out additional requirements as regards sales of financial services at a 
distance. In the context of  upcoming legislative reviews, the Commission will systematically 
assess  whether  consumer  protection  rules  and  the  regulatory  framework  to  fight  money 
laundering,  terrorist  financing  and  any  other  financial  misbehaviours  including  tax  evasion 
are suited to the digital world, and propose legislative amendments where needed.  

Finally,  to  ensure  that  European  consumers  are  made  aware  of  these  opportunities  and  that 
digital  financial  products  and  services  fulfil  their  potential  to  fight  financial  exclusion,  the 
Commission is ready to help fund financial literacy programmes focusing on digitalisation to 
be  implemented  by  Member  States,  for  example  through  the  structural  reform  support 
service. The Commission will also duly consider the digital aspect of the actions proposed on 
financial literacy in the CMU action plan.30  

  Strengthening digital operational resilience 

Reinforcement of digital operational resilience of financial market participants is a necessary 
cross-cutting measure. The increased reliance on digital and remote technologies as a result 
of Covid-19 has illustrated this once even more. The EU cannot afford to have the operational 
resilience and security of its digital financial infrastructure and services called into question. 
There    is  also  a  need    to  minimise  the  risk  of  client  funds  being  stolen  or  their  data 
compromised.  Alongside  this  strategy,  the  Commission  is  today  presenting  a  proposal 
designed to enhance the operational resilience of the financial sector. This complements the 
ongoing review of the Directive on security of network and information systems.31 

Key actions     

The  Commission  will  propose  by  mid-2022  the  necessary  adaptations  to  the  existing 
financial  services  legislative  framework  with  respect  to  consumer  protection  and 
prudential rules, in order to protect end-users of digital finance, safeguard financial stability, 
protect the integrity of the EU financial sector and ensure a level playing field.  

The Commission is presenting today a proposal for a new EU framework for strengthening 
digital operational resilience. 

5.  Conclusion 

30 Communication from the Commission to the European Parliament, the Council, the European Economic and 
Social Committee and the Committee of the Regions - A Capital Markets Union for people and businesses-new 
action plan, COM(2020)590  

31 Directive (EU) 2016/1148 of the European Parliament and of the Council of 6 July 2016 concerning measures 
for a high common level of security of network and information systems across the Union (OJ L 194, 19.7.2016, 
p. 1). 

17 

 
 
 
 
 
                                                           
This  strategy  identifies  key  priorities  and  objectives  for  digital  finance  in  Europe  over  the 
four years to come, based on output from extensive contacts with stakeholders. 

To  achieve  these  objectives,  the  Commission  is  committing  to  a  number  of  important 
measures.  

In addition, private stakeholders, national authorities and the EU must work closely together. 
Building on the digital finance outreach, the Commission encourages consumers, businesses, 
established financial firms, new fintech companies and their employees to engage actively in 
the implementation of this strategy. The Commission will work together with the legislators 
and  the  supervisory  community  at  both  European  and  national  level.  Member  States  and 
national  supervisors  should  continue  and  expand  their  numerous  innovative  initiatives, 
amplifying  their  effects  beyond  national  markets  to  encompass  the  EU  single  market  as  a 
whole.  

Acting  together,  Europe  can  lead  on  digital  finance,  to  support  the  economic  recovery  and 
benefit Europe’s people and businesses. 

18