Ante Žigman: Digitalisation of finances makes it more challenging to identify “cross-border provision of services”
President of the Hanfa Board Ante Žigman participated in an interesting panel discussion titled Improving the Fintech – Commercial Bank – authorities dialogue within the European Bank Coordination (Vienna) Initiative – Full Forum which took place in Vilnius, Lithuania, on 6-7 May 2024.
The panel discussion focused on topics such as benefits and lessons of regional integration, digitalisation beyond transactional services, and challenges and opportunities of digital banking and open banking.
Digitalisation is transforming the financial sector. This transformation and the application of innovative technologies have the potential to benefit both individuals and companies.
As Mr Žigman mentioned, in the area of non-banking services, i.e. securities markets, several areas arise in that context in the European Union. These are digital trading platforms, fund distribution platforms and platforms offering robo-advice.
“Digital financial services are inherently borderless, which raises questions as to when the obligation to notify of ‘cross-border provision of services’ arises and if so, how to classify these services: under the ‘right of establishment’ or ‘freedom of services’. This, in turn, creates supervisory challenges, but also difficulties for consumers in establishing which authority is the relevant one, e.g. in the event of a complaint or need for redress.”
While discussing opportunities of the potential growth of digitalisation beyond transaction services, Mr Žigman mentioned that BigTech financial services activities in the US may be an indicator of future trends in Europe, in particular, the provision of financial products to consumers and retailers beyond payment services. Among them, partnerships or cooperation with financial services as regards the provision of buy now, pay later services, crypto-related services in the area of payments (e.g. via exchange services) and the issuance of the so-called “stablecoins” stand out as the potential ones. He particularly emphasised the entry into force of the MiCA Regulation, that provides regulatory certainty to potential market entrants and may drive new entrants to the sector. “Furthermore, artificial intelligence is becoming an important part of financial services and we as regulators need to monitor all the risks that arise from AI evolution,” said Mr Žigman.
He pointed out that through its supervisory activities, Hanfa monitors unauthorised provision of investment services (by non-authorised entities or entities operating in Croatia without notification), directly or as a result of client complaints. It also regularly publishes warnings regarding such entities on its website. “Aside from implementing new requirements into supervisory practice, we are actively raising customer awareness through our educational activities on a daily basis,” Mr Žigman concluded.
