The impacts of technological innovation on regulatory structure: Fintech in post-crisis Europe

Abstract

This chapter examines technological innovation and its impact on European regulatory structures in recent years. The dynamic features of financial markets and the innovation of complex financial products and services based on new technologies and business models have presented regulators with significant challenges. Specifically, how can regulators effectively scrutinise unprecedentedly large volumes of market data? Is ‘Regtech’, instruments developed by industry to assist regulators, able to strengthen private compliance with public regulation? Does an alternative approach which institutionalises public–private cooperation offer answers to these new regulatory challenges? Responding to these questions, we adopt an analytic approach that categorises innovations by the type of regulatory uncertainty they produce. Our findings indicate that different types of uncertainty are driving divergent responses at the national and European levels, leading to a mixture of regulatory trajectories: cooperation and competition, centralisation and fragmentation.