Fintech as a Facilitator for the Capital Market Union?

Abstract

FinTech is the word that has been receiving a lot of attention recently. This term originates from the merger of “finance” and “technology”. It represents an innovative and emerging field that affects the future of financial markets. Innovation in diverse formats and contents has been the driving force of any financial market. Yet, now the innovation seems to be more than a driving force. It might have become the key for a survival. Modern financial regulation has been predominantly economically driven, progressing from addressing market failures to creating more efficient, competitive and reliable markets. The European Union has for number of decades been struggling with creating a true integrated single market for financial services. Investors, professional or retail, often have lacked trust in non-domestic or cross-border products, whereas financial institutions, unless sufficiently robust, remain active only in their known (domestic or regional) territories and the capital market remains cleft. This paper argues that with adequate regulation of FinTech in the European Union, the Union could finally bridge the divide and finally establish an effective capital market.