In the second installment of our exclusive series, “The Fintech Future: 2024 Fintech Trends,” we bring you an in-depth conversation with Boyko Atanasov, the distinguished Chair of the Financial Supervision Commission (FSC).

 In this insightful interview, we talk with Mr. Atanasov about the pivotal role the FSC plays in shaping the fintech ecosystem, how regulatory frameworks are evolving to foster innovation while ensuring stability and security, the regulatory challenges and opportunities in Bulgaria, and more. 

Today we are presenting you Boyko Atanasov, chair of the FSC in Bulgaria. Mr. Atanasov was elected as chairman of the FSC by the 44th National Assembly of the Republic of Bulgaria in 2019. Before that, he had more than 20 years of experience in the revenue administration and from 2013 until 2017 he was executive director of the National Revenue Agency. 

Mr. Atanasov, which, in your view, are the global trends in 2024 we could expect in the Fintech industry?

The Fintech industry is in a dynamic evolution state, where it incessantly reveals innovation spectrum in front of us putting into question the regulations established. It is this industry, which namely provokes us to analyze the necessity of introducing progressive solutions accessible to a wider audience. I am deeply convinced that in the transforming financial ecosystem in 2024, services focused on personalized, secure and sustainable financial relationships, reflecting unprecedented technological advancement and consumer-centric innovation, will resonate. 

In response to global trends in sustainability and environmental protection, this year we shall witness the rise of green (ESG) fintech trends, which will align financial technology with environmental considerations. Fintech solutions will evolve, so that by emphasizing both the sustainable investments and green financial activities, we will strive towards the goal of reducing the carbon footprint. The approach in question aims to connect technology with sustainability by strengthening the role of the financial sector in promoting practices that positively contribute to the environment and support global sustainability goals.

We are witnessing digitization in all its aspects, including the use of blockchain and artificial intelligence (AI). In our role as regulator of the non-banking financial sector, it is very important for us to track innovative financing, evaluate new tools and practices, but at the same time protect consumers and  act as a guarantor of the stability of the non-banking sector. 

The advanced integration of artificial intelligence (AI) and machine learning (ML) will have significant impact on the customer experience, on the more precise detection and mitigation of fraudulent activities, and will optimize risk management strategies as well. 

The development of these algorithms will lead to faster and more accurate financial solutions, invented to meet the unique needs and goals of individual users, so that we expect to enhance the level of their satisfaction and to increase their engagement.

The increased need for high cyber security will provide the basis for the protection of user data, tightly integrated in financial platforms. Improved features including advanced biometrics, multi-factor authentication and advanced encryption protocols will become ubiquitous elements of fintech security structure. These improvements will strengthen security barriers, protecting sensitive consumer information against potential threats and breaches, and maintaining integrity and trust in digital financial services.

How has the Financial Supervision Commission ensured adaptation of regulation to accommodate the evolving FinTech landscape in 2024?

It is important to note that regulatory approaches can vary in all jurisdictions. Specific adaptations will depend on regulations and priorities for each country or region, taking into account both technological progress and innovation as well as the European legislative framework. One way is the “regulatory sandbox” – a distinctive initiative of the European Commission to emphasize a common approach to harmonize and coordinate the efforts of regulators to create a smoother environment for FinTech innovations. 

FSC finalized the project for “Building a Unified Information System (UES). Since the autumn of 2023, the UES has been functioning successfully, and with its introduction, we report a significant improvement in the process of administrative service to citizens, businesses and supervised entities. All administrative services are fully accessible digitally. In addition to being part of the state administration system, in real time they are integrated with the activities and processes, and an exchange of information with the regulatory authorities of the EU – European Insurance and Occupational Pensions Authority (EIOPA) and the European Securities and Markets Authority (ESMA).

Of particular importance for 2024 will also be the regulations of crypto assets, as the dynamic nature of financial markets accentuates digital financial services, which are an increasingly important part of the European economic environment. Although the FSC has not been unequivocally designated as the national competent authority in this area, our daily work with the European regulators, in the face of ESMA, gives us the reason to be directly involved in this process and to follow the legislative changes, still at an initial level, but with the expectation that they will completely change the financial landscape of Europe. We are monitoring the introduction of the two acts: the European Digital Resilience Act (DORA) and the Markets in Crypto Assets Regulation (MiCA). The DORA Regulation, which entered into force in January 2023, aims to create a regulatory framework for digital operational resilience through which all companies can ensure that they can withstand all types of disruptions and threats related to information and communication technologies (ICT), with the aim of preventing and mitigating cyber threats. On the other hand, MiCA’s goal is to create a regulatory framework for the crypto asset market that supports innovation and harnesses the potential of crypto assets in a way that preserves financial stability and protects investors. EU countries must adopt national laws aligned with the regulation by March 2024, with full implementation starting in stages. DORA and MiCA will support innovation and the deployment of new financial technologies while ensuring an appropriate level of protection for consumers and investors.

Are there specific regulatory challenges or opportunities that the Bulgarian FinTech business may face in the current and the following years?

It is important for the Bulgarian FinTech business to keep up with the evolving regulatory environment, to engage in constant dialogue with the relevant industry associations and to seek legal advice in order to navigate the specific challenges and opportunities in the country. Some common challenges and opportunities for FinTech businesses in Bulgaria are the regulatory framework, licensing and authorization, data protection and privacy, risk management and cyber security.

As for the opportunities, they are: digital transformation, financial inclusion, cooperation with traditional institutions, government support and initiatives, and cross-border expansion.

How does the Financial Supervision Commission promote cooperation between traditional financial institutions and FinTech startups, especially in the non-banking sector?

The Financial Supervision Commission always proactively participates in cooperation programs and initiatives, provides regulatory guidance and support. Showing regulatory flexibility and sharing information is paying off. I believe that our continued partnership with the Bulgarian FinTech Association will contribute to promoting the creation of innovation centers and incubators. 

The role of the FSC is to provoke the achievement of synchrony between the regulatory requirements and their implementation in a digital environment, with the ultimate goal being to reduce the administrative burden. 

Part of the concrete results is the functioning Innovative Hub, providing a single point of contact with FinTech companies and the changed regulations for accessibility to the capital markets of small and medium-sized enterprises, the successfully functioning UES and the mobile application – FSC Mobile, the purpose of which is to help users and supervised entities, through the use of the most popular operating systems – Android and iOS.

The Financial Supervision Commission will continue to actively work and be in dialogue with the participants in the non-banking financial sector, and the result of the partnership between the national regulator and business is the maintenance of a sustainable and innovation-friendly business environment.