Technology Update

• EC consults on digital finance and retail payments strategy
• Digitalisation of SMEs is a key strategic priority for the European Commission
• EC puts forward EU artificial intelligence and data strategy
• IOSCO publishes report on regulating crypto-asset trading platforms
• ACCA report – The digital accountant: digital skills in a transformed world

EC consults on new digital finance strategy for Europe / FinTech action plan

The coronavirus emergency has highlighted the importance of innovations in digital financial products and services. Digital finance can contribute in a positive way to tackling the consequences of the crisis for businesses, economy and society.

Digitalisation of the financial sector is becoming prevalent and can be expected to accelerate following the Covid-19 pandemic.

On 3 April, the Commission launched a consultation focused on three priorities to stimulate the development of digital finance in the EU:

• ensure the EU financial services regulatory framework is fit for the digital age
• remove fragmentation of the Single Market for digital financial services
• to promote a well-regulated data-driven financial sector

Accounting, auditing, banking, insurance are listed among the sectors that can respond to the consultation.

Among of the pertinent matters covered in the consultation are an open finance policy, the benefits data-driven innovation can bring in compliance and supervision, the use of AI-based models in the financial industry

Digitalisation of SMEs is a key strategic priority for the European Commission

In its new SME strategy, released on 10 March 2020, the European Commission has put a strong emphasis on empowering SMEs to better grasp the opportunities offered by new digital technologies.

The digitalisation of SMEs will be supported by a network of 240 Digital Innovation Hubs, in each region of Europe. These hubs will offer opportunities for SMEs to test new technologies, access financing advice and market intelligence as well as networking opportunities.

The Commission will focus on developing digital skills through Digital Crash Courses for SME employees to learn about AI, cybersecurity or blockchain.

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EC consults on Retail payments strategy for the EU

Together with digital finance strategy, the Commission also launched a consultation on retail payments on 3 April. The consultation is focused on four key objectives:

• Fast, convenient, safe, affordable and transparent payment instruments;
• An innovative, competitive, and contestable European retail payments market;
• Access to safe, efficient and interoperable retail payments systems;
• Improved cross-border payments

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EC publishes EU strategy on artificial intelligence

On 19 February, the EC has published the EU strategy on Artificial Intelligence (AI). For the Commission, building trust in AI is essential for its successful uptake.

The new regulatory framework will follow a risk-based approach. Clear rules will apply in high-risk AI systems without disproportionally burdening less risky ones. For high-risk cases, AI systems should be transparent, traceable and guarantee human oversight. Authorities should be able to test and certify the data used by algorithms.

The EC emphasises that AI should be human-centric, ethical, sustainable, respecting fundamental rights and values. Independent assessment of AI-systems will facilitate trust in this technology.

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EC puts forward a European strategy for data

Along with EU strategy on Artificial Intelligence, the EC has also published the European data strategy. The ambition is to enable the EU to become the most attractive, secure and data-agile economy.

A number of policy measures are put forward to achieve this goal. Common European rules and efficient enforcement mechanisms should ensure that:

• data can flow within the EU and across sectors;
• European rules and values, in particular personal data protection, consumer protection legislation and competition law, are fully respected;
• the rules for access to and use of data are fair, practical and clear, and there are clear and trustworthy data governance mechanisms in place; there is an open, but assertive approach to international data flows, based on European values.

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EU Agency for Cybersecurity analyses standards in areas relevant to the potential EU candidate cybersecurity certification schemes

The ENISA report explored four areas where standards and policies can evolve to become potential candidates for EU cybersecurity certification schemes.

The report analysed standards, identified gaps and proposed recommendations to address the gaps for the standards to form the basis of future candidate EU cybersecurity certification schemes.

The report found that for a potential EU candidate scheme to be successful, the levels of assurance should reflect the market needs. Standards include technical rules that can provide the guiding principles for assurance levels in all four areas.

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ENISA issues recommendations for standardisation in support of the cybersecurity certification

In this paper, ENISA presents the value of the cybersecurity standardisation for certification, the roles and responsibilities of Standards Developing Organisations and discusses various ways how standardisation can support efficiently the process of certification schemes.

It proposes the qualification system, which can be used to define more precisely the requirements associated to the different assurance levels mentioned in the article 52 of the Cybersecurity Act. “Assurance levels of European cybersecurity certification schemes”.

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IOSCO publishes report on regulating crypto-asset trading platforms

IOSCO’s report Issues, Risks and Regulatory Considerations Relating to Crypto-Asset Trading Platforms looks into the issues and risks associated with crypto-asset trading platforms (CTPs). It describes key considerations and provides related toolkits for each key consideration:

• access to CTPs
• safekeeping participant assets
• identification and management of conflicts of interest
• transparency of operations
• market integrity, including the rules governing trading on the CTP, and how those rules are monitored and enforced
• price discovery mechanisms, and
• technology, including resiliency and cyber security.

IOSCO examines how existing standards could apply to stablecoins

The IOSCO report Global Stablecoin Initiatives examines the regulatory issues arising from the use of global stablecoins and explores how existing IOSCO Principles and Standards could apply to these arrangements. This report was prepared by the IOSCO´s Fintech Network to identity possible implications for securities market regulators.

According to the findings, depending on its structure, a global stablecoin may fall within securities market regulatory frameworks. Whether IOSCO Principles and Standards are relevant to stablecoins depends on the specific design of each initiative and its legal and regulatory characteristics and features.

ACCA report: The digital accountant: digital skills in a transformed world

The recent ACCA report explores the digital challenges accountants face and how they can maximise opportunities by becoming a digital citizen. The report is informed by a survey of 4,264 accountants globally.

Findings reveal that while in the more traditional areas accountants have an expert ability level (spreadsheeting (81%), enterprise resource planning (72%)), only 20% of accountants have expertise in emerging technologies such as blockchain and artificial intelligence and machine learning.