Erhvervsudvalget 2019-20
ERU Alm.del Bilag 341
Offentligt
Additional answers
Due to technical issues with the consultation document, the Danish government has not been able to
access the comments section of some of the questions in the survey. This document provides those
additional comments to the consultation on a new digital finance strategy for Europe / FinTech action
plan.
Question 7. Building on your experience, what are the best ways (regulatory and non-regulatory
measures) for the EU to support the uptake of nascent technologies and business models relying
on them while also mitigating the risks they may pose?
Comment:
In Denmark, we have implemented an innovation hub and a regulatory sandbox. We have
received very positive feedback from the industry, especially regarding guidance, handheld supervi-
sion and our regulatory sandbox. Many companies have expressed that it is very positive that the
financial supervisory authority is visible, easily accessible and willing to engage in dialogue regarding
fintech.
We suggest more inclusion of academia in European expert groups.
Question 24. In your opinion, what should be done at EU level to achieve improved financial
education and literacy in the digital context?
Comment:
Regulation should ensure that information documents can be made available digitally. It
is not sufficient to put a pdf on a webpage, since that works poorly on many devices. Thus, infor-
mation documents such as the Key Information Document (under PRIIPs) should be made "fintech
mature".
Question 27. Considering the potential that the use of publicly available data brings in finance,
in which areas would you see the need to facilitate integrated access to these data in the EU?
Comment:
We believe this question is for financial companies to answer. However, it is our impres-
sion that assuring access to and increasing the quality of publicly held data could have great value for
both consumers and companies, and should be a focus of attention when discussing the digital trans-
formation of the sector. For example, access to tax returns and company accounts could help increase
the quality of banks credit assessments and CDD processes. Having access to passport registries
would allow FIs to improve the quality of customer onboarding and ongoing due diligence. Thus,
considerations regarding the availability and quality of public data are key when discussing the de-
velopment of more data-enabled and digitally founded financial service offerings, both in regards of
updating regulation and sectoral policies to reflect the opportunities provided by data and by ensuring
that they are harmonised and standardised across EU Member States. It is however also important
that the discussion includes the potential risks in increasing access to publicly held data, such as data
privacy issues and the risk of financial exclusion.
Question 28. In your opinion, what would be needed to make these data easily usable across the
EU?
Comment:
Same as above.
 ERU, Alm.del - 2019-20 - Bilag 341: EMs høringssvar om digital finance strategy, fra erhvervsministeren
Question 33. In your opinion, for which specific financial products would an open finance policy
offer more benefits and opportunities?
Comment:
European crowdfunding service providers that will have to provide information on pro-
jects and carry out suitability tests etc., according to the new Regulation on European crowdfunding
service providers, could also benefit from the opportunities that an open finance policy can offer.
Question 35. Which elements should be considered to implement an open finance policy?
Comment:
All the elements are relevant. Regarding APIs, we believe they are beneficial, but we
should be mindful that they are difficult to implement in practice, considering the experiences from
PSD2.
Focus on consumers and an ethical approach to using the large amount of data that is accumulated is
especially important. As an example, the insurance and pension industry in Denmark has developed
a set of data-based principles to help support the industry's journey towards increasing digitalisation.
See also answer to question 29.
Question 39. In your opinion, what are the main challenges or risks that the increased use of AI
based models is likely to raise for the financial industry, for customers/investors, for businesses
and for the supervisory authorities?
Comment (other for investors/consumers):
Increased and/or more widespread use of AI for provid-
ing investment advice to customers raises several risks for consumers/investors. Firstly, there is a risk
of consumers receiving unsuitable advice because of biases, errors and/or functional limitations in
the model. This could be because of limitations or assumptions within the model and because of poor
quality and/or incompleteness of the information required from the consumer as input in the model.
It could also be because of human errors made when programming the model, because the underlying
algorithm is biased due to conflicts of interests or because it is manipulated, e.g. due to hacking.
Comment (other for supervisory authorities):
Increased and/or more widespread use of AI for e.g.
providing investment advice to customers raises several challenges for supervisory authorities. It
raises the importance of supervisory activities ensuring that providers of AI models have mechanisms
in place to ensure that an algorithm delivering financial advice is well calibrated and to ensure that
appropriate controls and testing are made when developing and maintaining automated advice tools.
It also raises the importance of ensuring the involvement of control functions such as risk, compliance
and internal audit when developing and monitoring algorithms.
Lack of clarity on rules also creates uncertainty for supervisory authorities. In Denmark, the FSA has
published a paper on good practice when using supervised machine learning. Overall, the paper sets
out requirements for regulated financial companies, when they use machine learning. E.g. the model
should be explainable and have good governance etc. Further to this in the answer to question 40
below.
 ERU, Alm.del - 2019-20 - Bilag 341: EMs høringssvar om digital finance strategy, fra erhvervsministeren
Question 40. In your opinion, what are the best ways to address these new issues?
Comment:
A common good practice paper and standard requirements for models could be beneficial.
In general, we believe that soft law and guidance would be preferable rather than AI specific new
regulation, as this could potentially hinder innovation. It is important that guidance is to be given at
EU level, because we tend to see national authorities interpreting soft law differently.
Also, we believe there is a need for clarity on the interplay between GDPR and AI. It is also essential
that supervisory authorities obtain the necessary skills and understanding of AI in order to understand
business models and provide sufficient supervisory of financial institutions engaging with AI.
Question 41. In your opinion, what are the main barriers for new RegTech solutions to scale up
in the Single Market?
Comment:
See our answer to question 15.