Poland Eyes Fintech Crown Through Regulatory Reforms

Poland is pushing ahead with plans to modernise the country’s fintech offering, as officials look beyond implementation of European directives to the potential for a regulatory sandbox.

Earlier this year authorities announced plans to make Poland a more attractive location for payment and financial services start-ups, by streamlining the application and registration process.

The prospects of those plans, particularly the intention to allow small payment firms to operate without a full licence, have received a further boost as the government declared the achievements of an innovation working group.

Jadwiga Emilewicz, undersecretary in the Ministry of Economic Development, announced that the measure was part of the Polish transposition of the revised Payment Services Directive (PSD2).

At a recent conference in the country she said the draft act was currently awaiting approval by the Council of Ministers, and included simplifications in the licensing process.

This would mean that only registration, rather than a full licence, would be needed by those payment institutions handling up to €1.5m a month.

“We are waiting for implementation of [PSD2]”, she said at Wednesday’s Impact Fintech conference in Katowice, Poland.

“I think it is one of the most important issues, so the introduction of a small payment institution which are not obliged to register ... is really something we expect might wake up the market.”

However, in the directive’s level one text some member states have already signalled to the industry they will restrict use of that provision.

Official sources in Poland insist that PSD2 will be transposed by the official deadline, although an anticipated November vote on the draft bill has not transpired.

Although some have expressed doubts about the ability of the country’s Financial Supervision Authority, the Komisja Nadzoru Finansowego (KNF), to oversee such an operation, the body looks set to have its remit expanded to handle new fintech developments.

“We are in the process of a public consultation [for] the extension of the statutes of the Polish financial supervision authority to include actions in support of financial innovation,” Emilewicz said.

“It will be the first time the KNF will be obliged to look for innovative technologies.”

One aspect of these new obligations for the KNF will be the requirement to publish all documentation in English as well as Polish, as part of a push to attract international talent and investment to the country’s fintech sector.

Currently in public consultation is also the “establishment of an effective mechanism for market-orientated interpretation of regulation”.

This forms part of a much broader simplification of Polish regulations, as authorities aim to remove 100 barriers to innovation internally identified by a newly established working group within the KNF.

The Ministry of Economic Development claimed that it had so far removed three of these barriers, with a further 58 currently under removal.

The effort has received support from industry figures in Poland.

“That group mustn’t finish; that must be a permanent element of the fintech ecosystem in Poland,” said Paweł Widawski of Fintech Poland.

The ultimate aim of these processes is the establishment of a regulatory sandbox in Poland, the planning of which, Emilewicz announced, would begin in 2018, with a virtual testing environment coming in 2019.

Marek Chrzanowski, chairman of the KNF, restated this hope.

“Something which is of great importance ... is the fact that the main problem we have seen with the fintech scene in Poland is a problem with regulation,” he said.

“We would like to remove this goldplating of regulations, this goldplating that was created when we were implementing European regulations.”

Sandboxes have been introduced with varying success in other countries; in the UK the concept has been praised but companies involved have struggled with issues related to de-risking.

Elsewhere, however, warnings were sounded over the idea of untrammelled growth in the fintech sector.

“PSD2 and the Polish hub will be useful ... because market practice is ahead of regulations,” said Tomasz Piwowarski, head of the Department of Inspections for Banks and Payments Institutions at the KNF.

“If such changes are introduced too fast and without proper thinking, well, there is an issue there.”