14 Sep Reaction to DNB/AFM Paper
To: The InnovationHub of the Dutch Authority for the Financial Markets (Autoriteit Financiële Markten, AFM) & the Dutch Central Bank (De Nederlandsche Bank, DNB)
Subject: Response to the Discussion Document from AFM-DNB on June 9th 2016: More room for innovation in the financial sector - Options for market access, authorisations and supervision
Date: 5 september 2016
Highly esteemed regulators,
On June 9 of this year the Dutch Central Bank (DNB) and the Dutch Authority for the Financial Markets (AFM) published a discussion document to share their conjoint thoughts on measures to foster innovation in the financial industry. The purpose of this paper was to collect/retrieve responses from the market and consequently to fit the measures to the needs of the market as good as possible. As Holland FinTech we would like to present a short account on this topic, making use of the invitation to react on your proposals.
First of all, we would like to compliment both regulators for their proactive attitude towards financial innovation and Fintech and the willingness to move forward and facilitating such progress. In our experience, the launch of the InnovationHub is a very positive development due to the strong improvement of interaction and exchange between regulators and financial services providers. We see this as an important step that will provide regulators with the necessary knowledge.
Choosing to examine new policies by publishing a discussion document can be seen as a progressive approach. Moreover, the open discussion which was intended with the discussion document, came along really positive. During our organised sessions with regulators and market actors to discuss the publication, many expressed their compliments regarding the attitude of the regulators. From our perspective, the proposed measures are a really welcoming step in order to realise a more innovative financial landscape, beneficial to the end users.
Besides this general positive reception we have some additional recommendations, extracted from our meetings with financial institutions, Fintech firms and experts:
- Closer collaboration It is good to see that DNB and AFM are cooperating more and more, as shown by the InnovationHub. However, the Hub currently knows two points of entry (one at AFM and one at DNB). It would be good to work even closer together on innovation by for example offering one clear webpage, since most innovation evolves between the boundaries of different regulators. Time-to-market reduction has to be leading in the design permit processes.
- Involve other regulators The involvement of other supervisory entities such as the Dutch Data Protection Authority (Autoriteit Persoongegevens) and the Autority for Consumers and Markets (Autoriteit Consument en Markt) is also desirable, as well as a strong connection with European regulators to address cross-border innovation. The mutual exchange of knowledge and jointly watching over the accessibility of regulators is essential for a future proof supervision.
- More active approach of the Ministry of Finance In the end, regulators such as AFM and DNB only can operate within the legislative framework and mandate of the Dutch Ministry of Finance. Because of the large role of Dutch Interpretation within European guidelines and frameworks, a strong recommendation would be to involve the Dutch Ministry of Finance in facilitating Financial Innovation, in collaboration with regulators. Amongst other things, this is relevant to apply proportionality for prudential supervision on smaller (newer) players.
- Facilitate learning and adopting There must arise a learning financial ecosystem, which enables knowledge exchange between all layers; from consumer to financial services and regulators until legislative entities. Maximum access to valuable knowledge on all levels and availability of financial solutions has a positive effect on the ecosystem.
- Technology in supervision Embedding technology by regulators to fulfil their tasks for innovative firms as well as more traditional financial institutions is indispensable. Applying knowledge and implementing Regulatory Technologies (RegTech) will contribute to a more efficient (potentially cheaper) and more effective supervision.
- Combine measures flexibly Regarding the proposed, separate measures, we plead for the possibility to regard the measures not only separate but also as a combination, as expressed by different market stakeholders. The proposed measures should be evaluated and modified on a frequent basis, to follow market developments and apply progressive insights.
- Communicate internationally To conclude we would like to emphasise that the world is becoming more international to an increasing extent, whereby there are more and more non-Dutch speaking parties who are interacting with regulators. Therefore, we plead for a communication in both Dutch and English around innovation and preferably also to communicate other information in general. By doing this, regulators will also contribute to a more attractive business climate for (innovative) financial services providers.
These recommendations do not represent a complete image of the discussion and recommendations that come out of the round-table sessions, which we, Holland FinTech, organised in March, May, July and August 2016 together with the regulators to strengthen the relationship between market and regulators around innovation. The minutes of these meetings, where many comments and suggestions on policy and work methods were made, are forwarded separately to the participants and regulators.
The cooperation and insights provided by the parties from our network are really valuable. We express our gratitude to all participating parties for their input and feedback: Baker&McKenzie, Qafis, ComplianceWise, Innopay, Mollie, Voldaan Factoring, CrossLend, Dutch Payments Association, ABN AMRO, Arthur’s Legal, AFM, JACCOO, OneLoan, Loyens & Loeff, Blanco Services, Heads Up, CMIS Group, DNB, Simon Lelieveldt, Ministerie van Financiën, Charco & Dique, Van Doorne, Kennedy van der Laan, KPMG, FG Lawyers, Orange Clover, Debiteurenbeurs, Rabobank, Cegeka, Symetrics, Buckaroo Bitpay, Thorofinance, VROA, FraudDynamics, Lendex, Payment Counsel, Owlin, Quantler, Omniplan en Holland FinTech.
We look forward to extend the pleasant work relation with you, as a regulator, and to exchange knowledge on a continuous basis. We are in any case at your disposal to further elaborate on our vision and to provide a bridge to our network of parties active in financial innovation.
On behalf of Holland FinTech and its network of more than 250 affiliated companies active in financial innovation, most respectfully,
Don Ginsel
