Act now to protect consumers on digital finance apps – EU watchdog

Action is required to update how cross-border financial services are regulated and monitored to protect consumer amid rapid digitalization, European Union (EU) regulators said.

People are turning to social media and using smartphones to buy and sell shares, move money around bank accounts and make payments, a trend accelerated by the COVID-19 pandemic, leaving regulators playing catch-up.

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“Digital finance has unlocked new synergies between financial and non-financial activities that potentially introduce systemic risk into the market for financial services,” said a joint report from the EU’s banking, insurance, and markets watchdogs.

Cloud computing, or banks and other financial firms using outsourced providers for services, is booming, the report said.

It is sometimes unclear how to categorize some digital financial services under existing rules, creating uncertainty over data privacy, anti-money laundering safeguards, and how much capital they should be holding, the report said.

It called on the bloc’s executive European Commission, which has opened a public consultation on digital finance, to take a “holistic” view of supervising financial services.

‘Big Tech’ targeted

New “supervision structures” may be needed to capture transactions spread across “mixed activity” groups or MAGs, such as Amazon, Google, Meta’s Facebook, Apple and other Big Tech firms offering…