Europe’s path to digitization and datafication in finance has rested upon four apparently unrelated pillars: (1) extensive reporting requirements imposed after the Global Financial Crisis to control systemic risk and change financial sector behaviour; (2) strict data protection rules reflecting European cultural concerns about dominant actors in the data processing field; (3) the facilitation of open banking to enhance competition in banking and particularly payments; and (4) a legislative framework for digital identification imposed to further the European Single Market.

The paper analyses these four pillars and suggests that together they will underpin the future of digital financial services in Europe, and – together – will drive a Big Bang transition to data-driven finance. These seemingly unrelated pillars together bolster an emerging ecosystem which aims to promote a balance among a range of sometimes conflicting objectives, including systemic risk, data security and privacy, efficiency, and customer protection. Furthermore, we argue Europe’s financial services and data protection regulatory reforms have unintentionally driven the use of regulatory technologies (RegTech) by intermediaries, supervisors and regulators, thereby laying the foundations for the digital transformation of both EU financial services and financial regulation. The experiences of Europe in this process provide insights for other societies in developing regulatory approaches to the intersection of data, finance and technology.

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