Guide to assessments of fintech credit institution licence applications

Foreword

As a result of technological innovation in the banking sector, a growing number of entities with fintech business models are entering the financial market. This is mirrored by the increasing number of credit institution licence applications submitted for authorisation to the European Central Bank (ECB) by such entities. These “fintech bank” licence applications, as discussed in this Guide, concern credit institutions as defined in Article 4(1)(1) of the Capital Requirements Regulation (CRR).

“Fintech” is an umbrella term encompassing a wide variety of business models. In line with the ECB’s responsibilities, this Guide refers to bank business models in which the production and delivery of banking products and services are based on technology-enabled innovation. ECB policies that apply to the licensing of banks within the Single Supervisory Mechanism (SSM), as presented in the Guide to assessments of licence applications, also apply to the licensing of fintech banks.

The ECB’s role is to ensure that fintech banks are properly authorised and have in place risk control frameworks for anticipating, understanding and responding to the risks arising in their field of operations. Equally, fintech banks must be held to the same standards as other banks and be subject to a comparable regime.

The purpose of this Guide is to enhance transparency for potential fintech bank applicants and increase their understanding of the procedure and criteria applied by the ECB in its assessment of licence applications. This transparency is also intended to facilitate the application process. The Guide is technology-neutral and seeks neither to support nor to discourage the entrance of fintech banks as market participants. The Guide does not have a legally binding nature and consists of a practical tool to support applicants and all entities involved in the process of authorisation to ensure a smooth and effective procedure and assessment.

It includes considerations for the supervisory assessment  of bank license applications that are particularly relevant to the specific nature of banks with fintech business models and should be read in conjunction with the general ECB guides related to the assessment of licence applications and fit and proper assessments.

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Guide to assessments of fintech credit institution licence applications