There are multiple reasons for the rising interest of new companies in the financial sector in the Netherlands. New regulations such as PSD2 create room for new players in the financial market (10 applications). The combination of economic growth and technological progress also attracts new companies to the financial sector (5 applications). And as a result of Brexit, financial institutions are looking to set up shop in the Netherlands to retain access to the European markets. This concerns about 15 payment institutions and electronic money institutions, and 5 companies from other sectors. In addition, the AFM has received a considerable number of licence applications from investment firms.
Market access requirements to guarantee a reliable sector
We welcome innovative new parties, because Dutch consumers and our economy stand to benefit from a varied range of financial products and services. We have a comprehensive licensing process in place to determine whether these parties are fit to operate in the financial sector. After all, citizens and businesses must be able to rely on these parties’ prudent management of their funds, careful handling of their data, operational availability of the financial products and services in question and proper consideration of their interests. They must also be able to rely on the orderly resolution of an institution that runs into trouble, to prevent their money and data from falling into the wrong hands. National and international regulatory requirements have been established to guarantee this, given the crucial importance of financial institutions for society. It is DNB's responsibility to assess as part of the licensing procedure whether the financial institution meets these requirements.
Many newcomers, in particular FinTech companies, need some time to align their operational management to the requirements of the financial world – which is understandable, as most of these companies do not have a financial-sector background. Before entering the financial markets, they must show that they are able to offer reliable service provision to consumers and the business sector. The specific digital products and services offered by FinTech companies involve specific risks for the public, that are assessed as part of the licensing procedure. In practice, applicants that are well-prepared to meet the requirements for financial institutions can be issued a licence much quicker than applications that are not.
Financial institutions applying for a Dutch licence because of Brexit do so because they wish to continue to offer their services in the European market. While these institutions wish to move only a small part of their activities to the Netherlands, they must be able to operate in the Netherlands independently from the parent company in order to qualify for a Dutch licence. This means, for instance, that the company must have a competent board of management with a mandate, that is sufficiently staffed to manage and control the activities and that has access to sufficient capital. Agreements on IT system availability and data security from the Netherlands must also be made. These companies too need time to prepare for meeting the requirements for market access.
DNB welcomes innovative companies in the financial sector, which is why we make every effort to ensure a smooth and swift licensing process. Newcomers can obtain information from several sources, for example from an informal meeting about the financial sector and its rules and regulations in DNB's and the AFM's joint InnovationHub. More than 600 questions have been dealt with here since the second half of 2016. DNB's websitealso offers extensive information about the licensing process.