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BRUSSELS (Reuters) - The European Commission is considering lowering regulatory requirements for emerging financial technology services in a bid to spur innovation and cut costs, the EU executive's vice president suggested on Thursday.
"Fintech" firms use modern technology to compete with traditional financial services providers, offering banking products such as payments or deposits more cheaply online.
Lower legal or capital requirements would reduce costs for fintech companies, but are likely to increase pressure on banks that are already squeezed in Europe by low interest rates and stiff competition.
The Commission is considering how to regulate the fintech sector to encourage its development in Europe, while protecting consumers from risks that may emerge.
"We will have to answer many fundamental questions," Commission vice-president Valdis Dombrovskis told a conference in Brussels. "For instance, shall we introduce new licensing categories for fintech activities?"
A special licence would imply lower capital requirements for fintech firms providing less risky services. Regulators in other regions have said they are considering similar measures.
A three-month-long public consultation launched by the Commission on Thursday will gather information on the subject from market actors and other interested parties, and will be followed by possible legislative proposals.
Reporting by Francesco Guarascio; Editing by Catherine Evans