3FOOD

Third Industrial Revolution Consulting Group
This said, the current regulatory framework is not properly adapted to the deployment
of digital financial services and needs further adjustments to be fit for the digital reality.
Currently, the regulatory framework does not allow banks to take full advantage of
technological innovations, hindering the digital transformation of the industry and
obstructing the launch of innovative products and services.
Policymakers should ensure that EU regulation is adjusted to the digital reality also for
financial services. The focus needs to be on regulating activities rather than institutions
that offer them. It is not a call for new regulations but more about adjusting,
simplifying, removing obstacles and inconsistencies and modernizing the EU
regulatory framework.
With this in mind, the Digital Single Market Strategy (DSM) – though to be generally
welcomed – should be reflected upon further, in order to take into account the
abovementioned aspects.
5.3 Holistic and Consistent Deployment of Regulation
Digital transformation should be understood as a whole, seeking the right balance between the
drivers of change and the impact on the existing business model.
The current banking regulatory environment does not reflect the fast moving digital
phenomenon. New access methods fostering a real cross-border and cross-sector economy (e-
ID, e-signature, e-invoicing, online platforms etc.) may change the way business operates across
different markets. This complete shift of paradigm requires a renewed approach in order to
efficiently balance benefits, risks and avoid market distortions. It means that banking legislation
should be adapted to the digital market reality.
Overall, the Digital Single Market strategy should consider and be aligned with existing or
forthcoming EU initiatives which will affect financial services.
It should notably be the case regarding the work currently conducted by the European
Commission to build a Capital Markets Union (e.g. alternative –digital- investment platforms for
crowdfunding, Venture Capital) or on the Green Paper on Retail Financial Services (e.g. digital
cross-border sales in Europe). Some recent or on-going EU legislations do not yet properly or
fully address the development made possible by digitalization, leading to certain contradictions
or inconsistencies that are potential obstacles to the Digital Single Market becoming a reality. It
is notably the case for the Payment Services Directive (PSD2), the General Data Protection
Regulation (GDPR), the Network and Information Security Directive (NIS) or the 4 th Anti-Money
Laundering Directive. Also, for instance, most EU regulators enforce cloud technology to be
compliant with local outsourcing regulations (outsourcing regulations have not been
harmonized) which by definition is against the idea of the cloud (which is meant for cross-
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