Tech companies in EU finance: Setting the balance between innovation and financial stability

Samuel Collot and Emmanuel Rocher
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Samuel Collot: Autorité de Contrôle Prudentiel et de Résolution (ACPR), France
Emmanuel Rocher: Autorité de Contrôle Prudentiel et de Résolution (ACPR), France

Journal of Risk Management in Financial Institutions, 2025, vol. 18, issue 3, 232-248

Abstract: The development of tech companies in financial services, while paving the way for innovation, may raise new forms of risk. First, by focusing on specific parts of the value chain or specific products which are in general less regulated, the development of such companies may result in increased fragmentation and complexity while preventing comprehensive supervision on their financial activities under current regulation. Secondly, the emergence of digital platforms as interfaces for accessing financial services may also result in new forms of distribution and dependencies for ‘distributed institutions’, which may in turn make the entire financial system more vulnerable. The aim of this paper is to explore the risks for financial stability related to the development of tech companies in financial services and assess whether the current regulatory framework is adequate to address the potential risks. Against this background and considering the diversity of business models, the paper outlines the different features of a possible European Union (EU) regulatory strategy that aims to balance the financial stability imperative and innovation according to three main options: (1) enhancing supervisory capacity to monitor the development of non-banks’ financial activities; (2) strengthening sectoral regulations where tech companies are likely to develop (eg non-bank lending, payments) to enable harmonised and consolidated supervision; and (3) imposing, when reaching a certain significance, the grouping of financial activities in a dedicated holding structure and implementing group supervision on such structure. This article is also included in The Business & Management Collection which can be accessed at https://hstalks.com/business/.

Keywords: big techs; financial stability; financial regulation; mixed-activities groups; financial innovation; financial supervision; digital finance (search for similar items in EconPapers)
JEL-codes: E5 G2 (search for similar items in EconPapers)
Date: 2025
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