FinTech: enabling European innovators to stay in Europe

“We have seen it too many times. European start-ups choose to leave for the US because it is easier to grow their businesses there. Today’s Commission proposal on crowdfunding platforms is an initial step to change this. By not having to comply with 28 different sets of requirements, but only one harmonised one, it allows the platforms to scale up”, said Burkhard Balz, the EPP Group’s Spokesman on Economic and Monetary Affairs, welcoming the Commission Action Plan on FinTech which includes a legislative proposal on lending and investment-based crowdfunding.

The proposal suggests the creation of an EU licence for crowdfunding platforms that would allow them to operate across the EU based on a single authorisation. It allows them to grow in Europe - currently German platforms can only operate in Germany, Croatian ones only in Croatia.

“There is an increasing need for diversifying funding options in the EU. Banks should not be the only source of money for businesses, particularly in innovative and emerging sectors such as FinTech. If it would be possible to find funding for an innovative idea just by clicking on a button on their smartphone, imagine the possibilities for European SMEs. For the EPP Group, it is, however, crucial that cybersecurity and level playing field aspects are not neglected. Access to funding has to be not only easy, but also safe”, said Balz.

Investment in the applications of FinTech represents billions of Euros and keeps increasing every year. According to Balz, the EU needs to make sure it benefits from these opportunities. It needs a strategy to sustain the development of new technologies in the financial sector, be it examples like payments through apps or the withdrawal of money without cards.

“Europe is best placed to become an innovation powerhouse in this field. It has a good academic base and broad access to technology, but what we need is a genuine Capital Markets Union so that we enable European innovators to stay in Europe”, concluded Balz.

The legislative proposal on investment-based crowdfunding is the first piece of legislation on FinTech coming from the EU and will be a reference point for any future legislation.