Beyond technology – adequate regulation and oversight in the age of fintechs

With the number of financial technology firms, or fintechs, increasing steadily in the age of digitalisation, banks as well as regulators must learn to deal with them. Supervisory authorities must ensure that their supervisory approach produces financial stability and establishes a level playing field for banks and technological innovators. In Germany, a risk-based regulatory approach ensures that no relevant risks remain unregulated – neither those stemming from traditional banks nor those created by fintechs. Traditional established banks, meanwhile, must face up to the challenges posed by these new competitors and ensure that their business models remain profitable. The following paper presents the status quo in terms of the regulation of fintechs under the German regulatory framework, assesses challenges for regulated institutions and sheds light on potential future risks.