Thus, banks could have similar benefits by adopting the APIs or the Open Banking concept. The emerging ecosystem of Bank & FinTech partnerships and collaborations i.e. Open Bank has paved the way for the data sharing economy, and a way banks to monetize their digital assets and data. Many open initiatives and government regulations open up access to the customer data banks hold on other businesses. Regulations such as Accessto-Accounts as part of PSD II and Open API (application programming interface) standards are paving the way for an open API ecosystem. Regulators in many other countries are also evaluating feasibility of open APIs with the aim to provide consumers with secure, less expensive, and easy-to-use financial services. PSD2, as the most significant regulation, will arguably make the greatest impact in opening up bank-held customer account data to Account Information Service Providers. The ecosystem of open banking would be influenced by PSD2. Firstly, PSD2 does not mandate the creation of common API standards. This means that individual banks may make their data available through different technical standards. Secondly, PSD2 only opens up access to customer transactional data for specific institutions, which must also be regulated PSPs. Furthermore, the concept of platform is a crucial factor for open banking, whereas regarding financial industry, the phenomenon of platforms has to be further developed. For payments and personal information this is expected to gain traction through the PSD2, as third parties can engage in service provisioning without actually owning bank assets. Open Banking extends this concept further.

This means that in the light of new FinTech risks, the current supervisory frameworks will evolve in a manner that ensures appropriate oversight of banking and non-banking service provider’s activity as well as new payment systems based on DLT solutions while avoiding innovation hindering. Different countries may follow different supervisory regimes, which includes direct oversight of the new market players, then establishing innovation hubs, accelerators and regulatory sandboxes. The role of Regtech in enhancing regulatory and compliance challenges Digital finance raises new risks and new areas of vulnerability might develop because of new financial products (virtual cryptocurrencies) and new technologies (distributed ledger based on anonymous users and on decentralized governance without accountability). Digital finance gives rise to an increasing number of financial players and eases cross-border transactions, which makes the monitoring of transactions more complex for financial institutions and public authorities. Finally, while new financial players are reshaping the financial sector, they may be outside the scope of banking sector regulation and subject to less stringent AML/CFT rules than are banks. New technologies may support greater efficiency for staying compliant. Regtech companies are especially keen to provide banks with more effective ways to improve their compliance and risk management, through outsourcing or insourcing processes. They may open up opportunities for digital transformation of control and support functions within banks (risk, compliance, legal, finance, IT). Regtech could address a wide array of requirements related to regulatory reporting, financial crime, operational risk (including cyber-security and fraud detection), consumer protection and data protection regulation.