Dublin. 23 November 2023
Thank you very much and look, I really wanted to participate and I appreciate participating online and I hope we can have that good conversation.
But you had an excellent Q&A there with colleagues on the panel and I’m learning all the time, so thank you for that.
I mean, what we’re talking about here is how do we deal with the reality of our lives.
How do we deal with digitalisation and finance?
Huge promise, maybe big perils as well, and how we manage all of that?
Of course, we want to harness innovation and we want a financial system, digital or otherwise, that’s open to all and new ways will emerge of doing business, that’s already happening.
So, there are new opportunities for us as consumers from all of this change.
And then on the risk side, cyberattacks are my biggest anxiety point, I have to say.
Fraud is on the increase and we’re trying to address that and also, we don’t want to leave people behind in all of this change.
So I’m going to talk a bit around those points and what we’re doing at a European Commission perspective to address them.
We all know that technology has evolved. It’s changing how we as consumers interact with the financial system.
Lots of new ways to access your money, to manage it and indeed to spend it.
Covid really brought home new ways of transactions and in one sense it really pushed forward the evolution of digitalization in finance.
But look at areas like crypto: extremely easy to invest in crypto, but extremely easy to be caught in the trap because we’ve seen incredible volatility and indeed we’ve seen illegal activity in that space.
It’s also an area where fraud is vibrant.
Now the financial system has always had fraudsters in the background trying to attack us and do bad things for their ill-gotten gains.
But crypto scams happen outside the regulated financial space and that can make it harder to detect and particularly to recover losses, and that’s why our Markets in Crypto Assets legislation which will apply soon is really, really important.
It’s important not just for Europe but also from a global perspective that we are taking action to address some of these perils in digitalisation.
MICA will bring more transparency, which is very much needed, and also address some of these risks in that market.
We call it digital finance, as if it’s something different than finance – because digital payments are still payments, online lending is still lending or borrowing, and online investing is still investing.
So I think the rules of the game are basic.
The digital piece changes some of those, in terms of what we need to do, but it doesn’t change the underlying activity.
So risks to market integrity, financial stability and consumer protection don’t go away by moving online.
Maybe some of the risks can decrease, but others will increase, and others might manifest themselves in a very different way and we have to look at how that evolves.
I know that in the member state I know best, the National Adult Literacy Association had a report last year.
And it goes into the pros and cons for the consumer based on talking to people about their lived experience with financial services.
It’s true that many welcomed the digital finance evolution, found it easy to use their mobile banking apps, really liked new fintech apps, helping them track their spending.
But the report also warned of people who felt left behind and weren’t offered support or services when they moved online.
And some, many, don’t have a good Internet connection all the time, and some don’t have smartphones.
So I think there are segments here that we need to be aware of.
To explain in one sentence that we have to be cognisant that finance is finance, but when it’s digital, there are issues around it that we have to address.
So what we again are trying to do is embrace the promise of digital finance and manage the downsides, it’s very straightforward.
It’s not that easy to do, but that’s the objective of all our work.
I just want to mention one area, instant payments regulation.
It’s a really good idea. It should have happened organically, but it wasn’t happening, so we moved to make instant payments a reality with the proposal.
We reached agreement just this month between the co-legislators and essentially it will mean that anyone providing standard credit transfers in euro will also have to provide the option of sending and receiving instant credit transfers.
That would be enormous in my view for both individuals and for businesses releasing cash flows, a really important part of this.
There’s a few things for me when I’m talking about legislation, we’re not talking about them. So we’re not talking about those consumers.
It’s all of us in the room, outside the room because we will have to more and more deal with digitalisation of finance.
And what does that require?
I think several things.
Strong regulation that deals with not just the here and now, but potential future challenges. That’s difficult, but I think we need to think around that.
It also requires two things from us as individuals.
We need to be a bit tech savvy, not to know everything, but at least to have a bit of knowledge and also money savvy.
Aware that when we’re dealing with money online and you’re investing and you’re not sure if this is a good or bad idea, caution can be an important part of it.
So, I think as well as the digitalisation of the skills required around that, it’s also I think to give people a sense that they need to be in control, not just of their finance but of their information.
And even for me, I’m beginning to be more aware of that.
So, I think in the past we click because we want to instantly read something or get access to.
I think around finance it might be a three second rule, so don’t click immediately, but think carefully.
Then the wider issue of inclusion, because I really believe, and I said this at my hearing, that the financial system is for everybody and particularly those who have limited access to it.
And I would hope that digitalisation will not exclude more but include, and that’s even around our talk around digital euro.
So I think there are elements of our work with you, and also can I say with the effort and the push from BUEC and organisations, and we really value that, that we can get to a place where our legislation works for people and business around the financial space.
I mentioned my biggest concern and I’m sure this is shared by people in the room is around cyber attacks, cyber security.
So we have our Digital Operational Resilience (DORA). This has to now be put in place.
Because we know that bad actors – both criminals and big stage bad actors – are targeting health systems, are targeting financial systems.
And we also know and fear that a significant attack on the financial system can be deeply disruptive and potentially cause chaos.
So while we embrace digitalisation, we need to be mindful of where it leaves us vulnerable and that’s our job.
And I hope that our work both now and into the future will address those realities.
But on the upside during COVID when we couldn’t access cash or we had to buy more online, weren’t we very happy to be able to do that using digital tools.
And we saw also in member states that had poor levels of broadband connectivity, I think there was a real effort to try and get people better connected.
So you know, we have made progress in many of these areas.
Last comment around fraud.
I have received already today texts about please click on this, etc. It’s all too frequent.
We need to think long and hard about how we’re going to tackle that, it shouldn’t be just the obligation of me as a citizen.
I think we have to look broader at this and target through legislation or whatever is required, including building awareness and the banks are doing that I have to say, because they don’t want to see their customers caught out.
But increasingly we’re finding that there are new levels of fraud and scams that really if a moment’s lapse, you click on something because you absolutely believe it’s the person you know in the bank and they’re using their name. But it’s actually not them.
So, the sophistication of criminals should not be underestimated.
Source – EU Commission