Speakers of the session
MEP, Committee on Economic and Monetary Affairs, European Parliament
Director for Regulation and Prudential Supervision of Financial Institutions, DG for Financial Stability, Financial Services and Capital Markets Union, European Commission
Director General, Financial Services, HM Treasury
MEP, Committees for Economic and Monetary Affairs and Budget Control and Co-Rapporteur for Taxe, European Parliament
Head of Unit, Health and Well Being Member, FinTech Task Force, DG for Communications Networks, Content and Technology, European Commission
Executive Vice President, General Counsel and Secretary, Western Union
Alejandra Kindelán Oteyza
Head of Research and Public Policy, Banco Santander
Chief Financial Officer, La Banque Postale
Vice-Chief Executive Officer, ING Bank
Objectives of the sessionIn a context where the single market for retail financial services has long been lagging behind and the fragmentation in particular of the banking market has increased as a result of the financial and sovereign crisis, the session will try to find out whether the ambitions regarding the deepening of such a single market can be significantly amplified.
The drivers of such an acceleration will be assessed among which will figure the take off of e-commerce, the recent strategy for an EU Digital market and the achievement of the PSD2. The political implications and related timeframes will also be outlined.
Points of discussion
What are the main expectations of EU citizens regarding the single financial market?
- Is there a real customer demand for cross-border financial services and, if so, is it a general demand or more limited to specific customer segments?
- What is the current state of the EU retail financial services single market? What is the impact of national behaviour and regulation, and the possible distrust, weighing on cross border distribution?
What are the main impediments to a single retail financial market?
- What are the issues raised by existing national regulations and their impact on EU citizens and cross border financial service providers? Can we differentiate between products that could more easily be provided remotely or via the Internet and those which cannot because they are too specific or require human intervention?
- Are there major sources of distrust on the financial sector that need to be addressed at the EU level? What are the threats and opportunities of the EU single market of retail financial services for domestic banks?
Which digital and regulatory initiatives would possibly encourage the further integration of retail financial services?
- What has been the impact of regulatory change over the past 5-7 years on the single retail financial services market? What are the key policy initiative(s) for fostering the further integration of EU financial markets?
- What could notably be the role of digitalisation of financial services and the Banking Union, notably on cross border provision of services?
- What is the expected contribution of the EU DMS and PSD2 to the single EU retail financial market? What additional financial infrastructures may contribute to further developing pan EU financial services?
Background of the sessionA retail financial market is expected to bring greater product choice, better value for money and lower prices for consumers. Similarly, financial firms ought to benefit from growth and productivity opportunities and avoid the current mandatory local presence. However, one key question is firstly does the Single Market for retail financial and insurance services markets exist yet?
Indeed, many obstacles to having access to financial products cross-border still exist. In addition, retail customers’ behaviour in the EU is different and requires strong local marketing investment and costs in order to address such specificities. Furthermore, physical proximity to customers and the ability to address them in their mother tongue remain essential.
Therefore, several consumer protection initiatives regarding pre-contractual information and transparency, as well as conduct and advice rules have been completed in order to strengthen the trust of retail consumers. Similarly, various directives are being transposed in the EU regarding mortgages, payment services, etc. The creation of the Banking Union and also the proposed definition of a European Deposits Guarantee Scheme should help to reassure EU depositors.
However, it is still necessary to remove many domestic specificities, which are strongly opposed to the deepening of the retail single market notably in the areas of taxation, consumer or data protection, customer identification, anti-money laundering requirements, national specificities for due diligence when granting credit, etc. Effective interoperability between payment solutions also present difficulties.
Similarly, the remaining fragmentation of the Banking Union, which still prevents banks and insurers from being considered as a single entity throughout Europe with single liquidity, single regulatory capital, wherever deposits or savings are collected…, increases the costs of pan European financial institutions and reduces competition and offers available.
This is why the EU Commission is consulting to find out which barriers still prevent consumers and firms from purchasing or offering directly financial services cross-border, in order to speed up the creation of a single retail market, in particular leveraging the context of accelerating digitalisation. Indeed, customers are increasingly using digital media and require less and less physical presence. So digital services should go hand in hand with cross-border services and products, notably by proposing digital contractualisation and e-signature to customers.