As a part of the digital finance (DigFin) package, the Commission adopted the digital finance strategy, which sets out key priorities for the development of digital finance from 2020 to 2024. The strategic objective is to enable digital finance and financial services innovation that will benefit both consumers and companies.

In short, the idea is to support the digitalization of the financial sector and ensure that all financial actors are able to act on the markets regardless of their size or market position. Technology and digitalization are considered to be enablers of better and more accessible services, and COVID-19 has clearly sealed a significant role for digital services in the life of Europeans.

With its several planned legislative proposals, guidelines, and examinations of the need for additional regulation, the DigFin strategy is ambitious. Nevertheless, while facilitating the use of technology and removing legislative obstacles are certainly desired steps in finance, the strategy also presents legislative proposals that will impose new obligations on financial actors. Thus the actual impacts of the strategy will only be seen in the next few years.

Four priorities of the strategy

The DigFin Strategy has four priorities guiding the actions needed to improve digital finance transformation.

1 Removing fragmentation in the Digital Single Market

The first priority is to remove regulatory fragmentation in the EU in order to facilitate the cross-border activities of financial actors, and also to ensure that consumers can use such services effectively. FinTechs, in particular, currently experience legislative obstacles that hinder the provision of cross-border services. The Commission’s proposed changes are expected to increase competition in the market and to help actors upscale their businesses.

The Commission is determined to reduce regulatory incoherence. As a part of a broader AML reform, the Commission will propose harmonized rules related to customer on-boarding. The Commission will also examine whether additional harmonized licensing and passporting regimes are needed, and whether it is possible to expand “one-stop shop licensing” to include different financial actors. In order to strengthen the collaboration between public and private stakeholders, a new digital finance platform will also be established. 

2 Adapting the EU regulatory framework to facilitate digital innovation

The regulatory framework for digital finance should ensure the responsible use of financial innovation that utilizes artificial intelligence. Therefore, it is essential for the framework to consider the risks presented by such new technologies. However, as the financial sector is facing constant change, it is important that all new regulation is adaptable, innovation-friendly and technology-neutral in order to remain relevant. 

The first steps towards achieving the aforementioned objectives have already been taken, as the Commission presented two related legislative proposals alongside the Strategy in September. Firstly, the proposal for a Regulation on Markets in Crypto-assets constitutes a coherent legislative framework for cryptos and associated service providers. This proposal will be presented in more detail in Part III of this blog series.  The second proposal is for a Regulation on a Pilot Regime for market infrastructures based on distributed ledger technology (DLT). 

The Commission will continue to remove the regulatory obstacles to innovation and will further improve the conditions for software investments and the uptake of artificial intelligence tools. New regulations, guidelines and recommendations regarding AI and digitalization are also to be expected as the strategy is carried out over the next five years.

3 Promoting data-driven innovation in finance by establishing a common financial data space

The third priority of the DigFin Strategy is to improve the availability of data and to facilitate real-time digital access to all regulated financial information. This priority will also further the objectives of the Commission’s new data strategy for Europe and will create the conditions necessary for using new technologies, such as ‘RegTech’ tools that facilitate the delivery of regulatory requirements for different reporting obligations, for example.

At the very core of the third priority is the goal of developing data sharing not only between financial supervisors, but also between all financial actors. This theme has been at the centre of financial discussions ever since PSD2 enabled the sharing and use of client data and further established the whole concept of open banking. 

In addition to businesses benefitting from open finance, there will be many advantages for consumers. Open finance is expected to facilitate the availability of new and innovative data-driven financial services and supplementary services developed by the incumbent banks and new market entrants such as BigTechs and FinTechs. A legislative proposal for a new open finance framework is expected in mid-2022.

4 Addressing the challenges and risks associated with digital transformation

Digital services and software solutions may often be used by many different actors and, at the same time, technology companies are increasingly entering the financial services market. Therefore the Commission considers it important to safeguard financial stability and protect investors and consumers from new kinds of risk. The “same activities, risks and rules” principle is highlighted here, as it is important to ensure the same level of consumer protection and possibilities, regardless of companies’ business concepts.

Again, with the fourth priority, there are several regulatory reviews – and possibly proposals – on the horizon. For example, a much-discussed proposal for a regulatory framework for digital operational finance (DORA) has already been presented by the Commission. The proposal will be presented in the next part of this series. 


The Commission’s DigFin Strategy aims to build a foundation for the digital transformation of the financial services sector. We expect the strategy and its key pillars to act as a catalyst for new financial services product innovations and for safe and stable financial infrastructure.

The new developments are also likely to accelerate competition in the EU market, as the democratization of data and the evolution from open banking to open finance will open up interesting opportunities for product innovation in financial services, while the goal of removing fragmentation in the Digital Single Market will help actors such as FinTechs to upscale their businesses cross-border and thus to challenge the incumbent players.

We help with building the foundation for the digital transformation

We help with building the foundation for the digital transformation of the financial services sector and assist in its further development. We support our clients with new financial services product innovations and with building a safe and stable financial infrastructure.