EU watchdog says some banks too plodding to win fintech race

The European Banking Authority (EBA) looked at the risks and opportunities from fintech and its impact on the business models of long established lenders. Risks to banking profitability depend on how well banks adapt to what customers want, and whether they are weighed down by books of souring loans or hindered by old technology, the EBA said in a report on its findings. EBA divided unnamed banks into three baskets: proactive front-runners with aggressive strategies; reactive “followers” who take a “wait and see” approach; and passive “reluctant to change” lenders left behind, many focusing on whittling down stockpiles of bad loans. While the EBA is developing its knowledge of fintech, there is no rush in the EU to slap heavy new rules on a sector that promises growth and jobs — and is still tiny compared with the main banking system. Meanwhile, banks worry that deep-pocketed tech giants like Google, Facebook or Amazon will use their huge retail footprints to scoop up millions of new financial services customers. But at this stage, fintech firms do not seem to be in direct competition with established banks, despite the fact that some fintechs are reaching maturity in terms of scale of operation and profitability.

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