Session 1: Introduction – concepts, actors, business models, macro trends – a global perspective
The session will present a global overview of the impact of the current technological waves on the financial market. Looking at the main emerging technologies, risks, benefits, and actors behind financial innovation, the session will focus on the tension between market-driven and regulation-driven innovation. The participants will be offered a comparative outlook on the most recent developments (EU vs UK/USA vs Asia). In particular, the session will reflect on different social-economic contexts, regulatory frameworks, and market structures that follow different approaches to developing the FinTech market, facing varying regulatory and supervisory challenges
Session 2: Big Data, Artificial Intelligence (AI), including Machine Learning (ML) and AI act.
This session will provide a non-technical introduction and outlook on Big Data and artificial intelligence (including amongst others, machine learning) applications in financial markets. First, it will introduce the fundamental knowledge behind technology applications. Second, it will look at the practical applications in different sectors and markets, such as credit scoring, robo-advisors, insurance pricing, and insurance claims management. The session will conclude with a discussion of the critical implications for regulation and supervision, focusing on the current state of AI art and its future development.
Session 3: Digitalisation and consumer protection issues
Digitalisation is enabling the offering of innovative financial products and services to retail consumers and customers, while also transforming the ways the latter can access traditional products and satisfy basic financial needs. This session aims to provide a glimpse of the challenges related to the intersection between digital finance and consumer protection – understood as the set of regulatory measures designed to ensure fair and responsible treatment of financial consumers in their purchase and use of financial products and services and in their dealings with financial services providers. The session links with the previous one focusing on the technology-driven business models innovations, and it aims to explore three different dimensions: the new risks for financial users stemming from the access to innovative financial products; the consequences of the use of digital distribution channels for the provision of traditional products; the impact on consumers from the heightened use of data across the financial industry value chain. Since digitalisation enables a broadened provision of products and services on a cross-border basis, the session will explore how recent regulatory initiatives aim at addressing existing and forthcoming challenges, and how fostered cooperation and coordination among supervisory authorities could support an adequate and consistent level of consumer protection within the single market.
Session 4: Technology-driven change and finance: comparative case studies (technology-driven innovation and business models)
The objective of this session will be to enhance the knowledge and understanding of the material learned in sessions 1, 2, and 3 by deep diving into examples and illustrations of new business models and technological innovation in the financial sector (e.g., in the area of decentralized exchange Open Banking, insurtech, robot-advisors, etc.). The cases will explore specific risks and opportunities arising in different modes of application of digital technology in the financial sector from a macro and micro perspective, looking at horizontal risk factors and using a sector lens of analysis for each case study to have a holistic view of the phenomena with specific attention of the interplay of customer protection and digital channels for customer’s acquisitions.
Session 5: Cybersecurity
This session will provide a global overview of the challenges of cyber security and operational resilience in the context of digital finance. Key technological factors will be examined and complemented by examples from the recent cases of cyber-attacks and disruptions affecting business continuity both at the level of individual financial service providers and the infrastructure level. Systemic risk implications will be briefly explored.
Session 6: Digital operational resilience (DORA)
The session will focus on the elements and implementation of DORA in the EU. The session will analyze the key elements, instruments, and potential implications of the new framework. The discussion in the session will focus on the challenges for the approach of financial institutions and supervisors, the required changes in supervisory approach and practice in the areas that include ICT risk management framework, ICT-related incident reporting, and oversight of critical ICT third-party providers.
Session 7: Group activity on cyber/DORA
This session will be an interactive group session, aimed at developing a set of core principles for ICT and security risk management. Participants will be provided with case studies from different sectors (e.g., banking, insurance, securities), they will be divided into smaller groups, and they will work with the moderators to analyses the case studies in the light of what they learned in the previous sessions, in order to identify different cyber risk profiles and impact for supervision, with a view to considering core regulatory principles that might be horizontally applicable to all sectors
Session 8: Blockchain
The session will offer a foundational level of technical knowledge of blockchain and DLT as well as an overview of use cases and trends across the sectors. The aim of the lecture is to give the basic concept behind blockchain technology, discussing the supervisory challenges stemming from the widespread use of technology-enabled financial services. This session will provide an outlook on the economic underpinnings, opportunities, risks, and limitations of digital currencies (payment, investment, and utility tokens, including CDBCs).
Session 9: Defi and tokenisation
This session will provide an introduction to the fundamental economic principles of Decentralized Finance (DeFi). It will explore the transformative nature of DeFi compared to traditional finance by examining how distributed ledger technologies are revolutionizing services like lending, investing, and cryptoasset exchanges, all without the need for a central intermediary. The session will also delve into the regulatory aspects of DeFi, analyzing its opportunities, risks, and limitations from a supervision standpoint. Additionally, it will highlight the concept of composability, which enables the assembly of complex financial products and its potential applications in traditional financial sectors.
Session 10: Markets in Crypto-assets (MiCA)
The session will focus on the new framework for markets in crypto-assets (MiCA Regulation) against the background of rapid technological development and diversification in crypto-asset use cases in the financial sector. The session will explore the objectives of MiCA (including investor and consumer protection) and its core elements (the issuer and crypto-asset service provider regimes) to enable participants to understand the framework and how it fits in with existing sectoral measures (e.g., issues of scope & categorisation of crypto-assets).
Session 11: Use cases and applications in supervisory practice (MiCA)
Building on the work on the comparative case study, the second group assignment will put participants in a real-life setting and task them with adopting supervisory decisions or identifying supervisory tools needed for such decisions, related to cyber risks and operational resilience or the framework for crypto assets under MiCA. The tasks and roles tailored to specific groups of participants include situations of information asymmetry, forward-looking perspectives, and conflicting interests.
Session 12: NCAs sharing best practices
This session will present NCAs’ best practices in the domain of digital finance to share practical experiences on how supervisors are tackling the challenges created by emerging technologies. In detail, the session aims to bring different approaches that have been successful at the national level for innovation strategy, Suptech projects, cross-border collaboration, dedicated sandboxes, etc., as a peer knowledge exchange to create a community around EU-SDFA.
Session 13: group assignment | sandbox exercise
The third and final practice session will task participants with acting in the context of regulatory sandboxes and innovation facilitators. Participants will be analyses a macro scenario that requests a strong policy intervention to support financial innovation. Indeed, the case study aims to discuss all possible policy instrument that facilitates and support the digitalisation of the financial sector, such as innovation hubs and sandboxes, to give an overall view of tools to enhance FinTech supervision while ensuring control over the risks behind the novel technological applications and reducing market entry barriers. Finally, the discussion will focus on the cross-border testing framework for FinTech to tackle the points raised in the previous sections and focus on cross-national collaboration for supervision, looking at the EU Digital Finance Platforms as a case study.
Session 14: Outside of the EU sharing NCAs experience
The session aims to give an international view of the course, presenting the experience of non-European jurisdiction on digital finance. This lecture will give a global perspective on supervisors’ practices and regulatory farmworkers in digital finance.
Session 15: Trends and priorities in digital finance – a cross-sectoral perspective
The concluding session of the foundational course module will draw on the key themes discussed throughout the course to provide participants with an expert outlook on future developments in digital finance. The session will focus on the issues of consumer protection and market integrity, the shifting role of supervisors in the context of fast-pacing technological change, and the evolving regulatory landscape.