Fintech trends for 2024 – interview with Boyko Atanasov, Chairman of the Financial Supervision Commission

Boyko Atanasov

Which, in your view, are the global trends in 2024 we could expect in the Fintech industry?

Boyko Atanasov: The Fintech industry is in a dynamic evolution state, whereat it incessantly reveals spectrum of innovations in front of us putting into question the established regulations. 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 of 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?

Boyko Atanasov: 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.

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 implementation 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 June 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?

Boyko Atanasov: 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?

Boyko Atanasov: 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  non-banking financial sector participants, as the result of the partnership between the national regulator and the business is the maintenance of a sustainable and innovation-friendly business environment.

Final results of the supplementary pension insurance activity for 2020

The Social Insurance Supervision Department of the FSC announced the final results of the supplementary pension insurance activity for 2020. The information was summarized on the basis of the audited annual financial statements and the annual statements for supervision purposes for 2020, submitted by the pension insurance companies to the Financial Supervision Commission. The data on distribution of insured persons by sex and age as of 31.12.2020 have also been published.

The total number of insured persons in the four types of pension funds as of 31.12.2020 is 4,819,139 people, increasing compared to 31.12.2019 by 1.18 per cent.

In the system of the supplementary pension insurance as of 31.12.2020, BGN 17,294,294 thousand of net assets have been accumulated. Compared to the end of 2019, the net assets of pension funds increased by 10.67 percent.

The total revenues of the pension insurance companies for 2020 amount to BGN 217,338 thousand and increased by 9.02 per cent compared to the reported revenues for 2019. The net financial result of the companies as of 31.12.2020 amounts to BGN 55,955 thousand

Detailed information on the final results of the supplementary pension insurance activity for 2020 and on the insured persons and the accumulated funds as of 31.12.2020 by sex and age are available in the section: Social Insurance Activity/ Statistics / Statistics and analysis / 2020.

ESMA statement on investment recommendations through social media

In order to inform the supervised entities and the public in the Republic of Bulgaria and to the commitments made by the Financial Supervision Commission in the person of Boyko Atanasov, Chairman of the Commission to EIOPA and ESMA, the Communications Directorate presents the statement of the European Securities and Markets Authority (ESMA). The EU Securities Regulator explains the rules that apply when someone established inside or outside the EU disseminates information offering an investment solution for financial instruments issued in the EU (e.g. stocks or bonds) aimed at wide audience. Dissemination of information would involve, for example, sharing an opinion on the current or future price of a share.

In EU law, this is called an investment recommendation.

What is an investment recommendation? EU law defines an investment recommendation as information that recommends or proposes an investment strategy, directly or indirectly, on one or more financial instruments or their issuers, including opinions on the current or future value or price of such instruments intended for dissemination channels or for the public. Dissemination channels can be analytical reports, articles, traditional media or even social media.

Who should read this statement? Anyone who recommends investment in any way or form through any platform, and anyone who makes investment decisions based on investment recommendations made on any platform. This includes social media.

What’s the problem here? The possibility of investors being misled. Investment recommendations must be made in a specific and transparent way so that investors, before making an investment decision, can know and evaluate: 1) the reliability of the recommendation and its purpose; and 2) all the interests of the authors of the recommendations. In this way, everyone is free to express an opinion without harming other people in the process.

Who prepares investment recommendations? Usually companies such as banks and brokers, but also financial analysts. However, other persons proposing an investment strategy may be deemed to make an investment recommendation when the proposal is intended for wider dissemination. This includes social media posts. In addition, if someone often makes investment recommendations with the aim of reaching a wide audience and he presents himself as having financial expertise, this may mean that the person could be considered an expert. In this case, the law requires more disclosures.

Where are the rules? The rules are contained in EU Regulation (EU) No. 596/2014 on market abuse. They require those who make investment recommendations to disclose their identities, present recommendations in an objective manner and disclose any relationships or circumstances that could impair objectivity. Additional rules must be followed by experts.

What happens if the rules are not followed? EU regulators proactively monitor the behaviour, orders and transactions of market investors. An investigation shall be carried out if there are grounds for doing so. If the rules related to investment recommendations are not followed, fines or further supervisory actions may be imposed, which may include a referral to the prosecutor’s office.

Diana Yordanova, Deputy Chairperson of the Financial Supervision Commission, Head of the Insurance Supervision Department, was an official guest at the 10th anniversary edition of the 2021 Young Auditor National Competition

The official ceremony of awarding the winners in the 10th edition of the National Audit Competition for Students “Young Auditor” 2021 took place on 9 June 2021 in the hall of the Higher School of Insurance and Finance (VUZF).

The aim of the competition is to promote the audit profession among young people in Bulgaria, as well as to emphasize the role of audit in the business community and society as a whole.

The ceremony was opened by the Rector of VUZF Assoc. Prof. Dr. Grigory Vazov, who thanked the organizers and partners of the competition for the perseverance and energy with which they have been holding this event for 10 years. “Without auditors, public and corporate life in Bulgaria and in the world is impossible. These are some of the most important and qualified people, and to become an auditor is a difficult endeavour that requires a lot of courage and effort, so I congratulate all students who have set out on this path,” said in his address the rector of VUZF Assoc. Prof. Vazov.

On behalf of the Chairman of the Financial Supervision Commission, Mr. Boyko Atanasov, a greeting was given by Ms. Diana Yordanova, Deputy Chairperson of the FSC, Head of the Social Insurance Supervision Department. They congratulated the entire organizing committee of the competition on the occasion of the 10th anniversary. In addition, they wished the organizing committee to continue to create traditions in education, “because this is one of the highest missions, thanks to which students open the door to themselves and others in intellectual and spiritual terms in the process of becoming full-fledged people and individuals. Education is more than learning, education is the attitude, the relationship with the world. It is gained through the acquisition of knowledge and values, with the help of which we interpret the world.”

Welcoming speeches for the jubilee edition of the competition included Mrs. Veronika Revalska, Manager of HLB Bulgaria, Mr. Tsvetan Tsvetkov, Chairperson of the National Audit Office of the Republic of Bulgaria, His Excellency Archimandrite Pahomiy, Rector of Sofia Theological Seminary “St. Ivan Rilski”.

The first place in the Young Auditor competition in 2021 was awarded to Artur Torosyan, a student at VUZF. He received a cash prize of BGN 2,000, provided by the auditing companies HLB Bulgaria and Zaharinova Nexia, for financing higher education in Bulgaria and the opportunity for a one-month internship in one of the audit companies organizing the competition. . The award was presented by Ms. Menda Stoyanova, Member of Parliament and Chairperson of the Committee on Budget and Finance in the 44th National Assembly.

The second place in the competition went to Gabriela Ivanova, a student at VUZF. She received a scholarship of BGN 1,000, provided by the Commission for Public Oversight of Registered Auditors, for higher education in the country and the opportunity for a one-month internship in the audit companies HLB Bulgaria or Zaharinova Nexia. The award was presented by Prof. Dr. Ognyan Simeonov, Chairperson of CPORA.

The third place went to Aleksandar Shargov from Moldova, a student at UNWE. He won a scholarship of BGN 500, provided by the Institute of Certified Public Accountants, for higher education in Bulgaria and also the opportunity for a one-month internship in one of the two audit companies. His award was presented by Mr. Boyko Kostov, Chairperson of ICPA.

The three winners also received special plaques.

At the ceremony 2 special prizes were awarded for participants with the most original ideas in solving cases. Elena Tarakova from UNWE won an annual scholarship in the amount of 15% of the tuition fee for the specialties in the master’s degree at VUZF. Her award was presented by the Rector of VUZF Assoc. Prof. Dr. Grigory Vazov. The second special award was presented to Damyana Yaneva, University of Economics – Varna by Mr. Tsvetan Tsvetkov, Chairperson of the National Audit Office.

A special greeting to the participants in the competition was given by the finalist and winner of the first edition of the Young Auditor Competition 2012 – Dr. Kiril Bashikarov, a graduate of VUZF, who 10 years later is a member of the faculty of the university. He congratulated the winners and participants in this year’s edition of the competition, emphasizing that his participation in this competition has boosted his professional development and career in one of the largest audit companies.

The organizers of the competition are VUZF and the auditing companies HLB Bulgaria and Zaharinova Nexia. The main partners of the competition are the National Audit Office of the Republic of Bulgaria, the Commission for Public Oversight of Registered Auditors (CPORA) and the Institute of Certified Public Accountants in Bulgaria (ICPA).

This year more than 80 students from 9 universities in the country took part in the competition, including the Higher School of Insurance and Finance (VUZF), Sofia University “St. Kliment Ohridski”, University of National and World Economy (UNWE), Academy of Economics “D. A. Tsenov ”- Svishtov, University of Economics – Varna, Southwestern University “Neofit Rilski”, University of Plovdiv “Paisii Hilendarski”, VFU “Chernorizets Hrabar ”, Academy of Economic Research – Bucharest.

Forty competitors managed to reach the second stage, taking a test. Those who passed the test with more than 50% correct answers were admitted to the third stage – solving a case.

Data on the value and the number of paid and filed claims under the Motor Third Party Liability Insurance, including by risk groups, as of 31.12.2021

The presented final data on the value and number of paid and filed claims under Motor Third Party Liability Insurance, including by risk groups, as of 31.12.2021 are published on the FSC website – section “Insurance Activity”, “Statistics”, “Non-life Insurance”, “2021”. The data do not include insurance contracts that are concluded by insurers under the right of establishment or under the terms of freedom to provide services.

Data on the value and the number of paid and filed claims under the Motor Third Party Liability Insurance, including by risk groups, as of 31.12.2020

 The presented final data on the value and number of paid and filed claims under Motor Third Party Liability Insurance, including by risk groups, as of 31.12.2020 are published on the FSC website – www.fsc.bg, section “Insurance activity”, “Statistics”, “Non-life Insurance”, “2020”. The data do not include insurance contracts that are concluded by insurers under the right of establishment or under the terms of freedom to provide services.

Data on the value and the number of paid and filed claims under the Motor Third Party Liability Insurance, including by risk groups, as of 31.03.2021

The presented final data on the value and number of paid and filed claims under Motor Third Party Liability Insurance, including by risk groups, as of 31.03.2021 are published on the FSC website – www.fsc.bg, section “Insurance activity”, “Statistics”, “Non-life Insurance”, “2020”. The data do not include insurance contracts that are concluded by insurers under the right of establishment or under the terms of freedom to provide services.

Data on the value and the number of paid and filed claims under the Motor Third Party Liability Insurance, including by risk groups, as of 30.09.2021

The presented data on the value and number of paid and filed claims under Motor Third Party Liability Insurance, including by risk groups, as of 30.09.2021 are published on the FSC website – www.fsc.bg, section “Insurance Activity”, “Statistics”, “Non-life Insurance”, “2021”. The data do not include insurance contracts that are concluded by insurers under the right of establishment or under the terms of freedom to provide services.

Data on the value and the number of paid and filed claims under the Motor Third Party Liability Insurance, including by risk groups, as of 30.06.2021

The presented final data on the value and number of paid and filed claims under Motor Third Party Liability Insurance, including by risk groups, as of 30.06.2021 are published on the FSC website – www.fsc.bg, section “Insurance Activity”, “Statistics”, “Non-life Insurance”, “2020”. The data do not include insurance contracts that are concluded by insurers under the right of establishment or under the terms of freedom to provide services.

Data on the persons allocated ex-officio in the supplementary mandatory pension insurance funds in 2020

 The Social Insurance Supervision Department of the Financial Supervision Commission published data on the persons allocated to the supplementary mandatory pension insurance funds in 2020. The information is obtained from the protocols for the ex officio allocations of persons who did not choose a supplementary mandatory pension insurance fund .

 The persons for whom the obligation to be insured in a universal or occupational pension fund has arisen and who have not submitted an application for participation within the stipulated terms or have submitted applications for participation in more than one fund of the respective type are allocated ex-officio. In 2020, a total of 76,211 persons were allocated ex-officio to the supplementary mandatory pension insurance funds, of which 66,490 persons in the universal funds and 9,721 persons in the occupational funds. The persons allocated ex-officio in 2020 account for 94.19 per cent of the total number of persons admitted (from newly accepted applications and ex officio allocations) in the universal funds and 92.13 per cent in the occupational ones.

 Information on the persons allocated ex-officio in 2020 can be found in the sections “Social Insurance activity”, “Statistics”, “Statistics and analysis of the social insurance market”.