Analysis of the impact of fintech and digitalisation on the Belgian banking sector and its supervision

In recent years, the financial sector has been characterised by an increasing degree of digitalisation and the introduction of numerous new applications, processes or products under the impetus of technological innovations and changed preferences of the consumer. Digital transformation and fintech are concepts that are closely intertwined. They are characterised on the one hand by the entry into the market of new innovative service providers and on the other hand initiatives of existing institutions whereby the organisation, the processes, the service provision and the product range are improved through technological innovations.

Fintech and digitalisation have a significant impact on individual banks but also on the sector as a whole. For this reason, the National Bank of Belgium has already taken various steps to enter into a dialogue with both new and established players in the market. In order to gather a sector-wide insight into the important trends and evolutions regarding fintech and digitalisation in the Belgian financial landscape, the NBB has started an analysis, based on a survey among and discussions with Belgian banks, to solicit general insights into and observations about fintech, views on certain specific business models and technologies, and the concrete fintech strategy followed by Belgian banks.

This report summarises the results of that analysis and wishes to contribute to raising awareness about the risks and opportunities of fintech. It also aims to share knowledge about the development of fintech in the Belgian banking sector, and to provide support to institutions in dealing with certain fintech-related challenges, by sharing best practices observed.

The first part of the report presents the results on sectoral level. It gives insight into the general impact of fintech on the banking sector, the Belgian banking sector’s preparedness for the challenges and opportunities related to fintech-related solutions and business models and how banks are positioning themselves in the face of these trends and the impact on their organisation. Finally, the innovative technologies and business models that are already being implemented by Belgian banks are discussed.

The second part of the report provides an overview of best practices the NBB has identified for credit institutions’ strategy and organisation around fintech and digitalisation and gives more insight into aspects prudential supervisors take into consideration when conducting supervision.