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Practice paper

Tech companies in EU finance: Setting the balance between innovation and financial stability

Samuel Collot and Emmanuel Rocher
Journal of Risk Management in Financial Institutions, 18 (3), 232-248 (2025)
https://doi.org/10.69554/FKYP8660

Abstract

The development of tech companies in financial services, while paving the way for innovation, may raise new forms of risk. First, by focusing on specific parts of the value chain or specific products which are in general less regulated, the development of such companies may result in increased fragmentation and complexity while preventing comprehensive supervision on their financial activities under current regulation. Secondly, the emergence of digital platforms as interfaces for accessing financial services may also result in new forms of distribution and dependencies for ‘distributed institutions’, which may in turn make the entire financial system more vulnerable. The aim of this paper is to explore the risks for financial stability related to the development of tech companies in financial services and assess whether the current regulatory framework is adequate to address the potential risks. Against this background and considering the diversity of business models, the paper outlines the different features of a possible European Union (EU) regulatory strategy that aims to balance the financial stability imperative and innovation according to three main options: (1) enhancing supervisory capacity to monitor the development of non-banks’ financial activities; (2) strengthening sectoral regulations where tech companies are likely to develop (eg non-bank lending, payments) to enable harmonised and consolidated supervision; and (3) imposing, when reaching a certain significance, the grouping of financial activities in a dedicated holding structure and implementing group supervision on such structure. This article is also included in The Business & Management Collection which can be accessed at https://hstalks.com/business/.

Keywords: big techs; financial stability; financial regulation; mixed-activities groups; financial innovation; financial supervision; digital finance

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Author's Biography

Samuel Collot joined the French Autorité de Contrôle Prudential et de Resolution (ACPR) in 2022 after eight years with major consulting companies, advising financial institutions on regulation and risk management. He currently works as a banking expert within the International Affairs directorate representing the ACPR in international and European technical groups, with a focus on capital and consolidation issues, financial conglomerates, operational risks and digital innovation.

Emmanuel Rocher joined the French Autorité de Contrôle Prudential et de Resolution (ACPR) in 2019. He was appointed Director for International Affairs in 2021, after various positions at the Banque de France and ACPR, including as Chief of Staff for Governor Villeroy de Galhau from 2015 to 2019. His current department is involved in the negotiations of the standards being discussed at international and European levels for both the banking and insurance sectors.

Citation

Collot, Samuel and Rocher, Emmanuel (2025, June 1). Tech companies in EU finance: Setting the balance between innovation and financial stability. In the Journal of Risk Management in Financial Institutions, Volume 18, Issue 3. https://doi.org/10.69554/FKYP8660.

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cover image, Journal of Risk Management in Financial Institutions
Journal of Risk Management in Financial Institutions
Volume 18 / Issue 3
© Henry Stewart
Publications LLP

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