The Polish economy, renowned for its diversification and high growth pre-2020, did not face as staggering a plunge as the EU economy at large in 2020. It contracted by 3.5%,1 its first shrinkage since 1996,2 but is projected to make a swift comeback with a 2021 growth rate of 3.3%.3 Poland also enjoys the EU’s lowest unemployment rate according to Eurostat data.4
This promising outlook could further attract startups and investment funds to Poland’s fintech ecosystem, which has become a major innovation hub in Central and Eastern Europe. Its particularly robust digital payments sector is becoming increasingly developed as the COVID-19 pandemic drives the swift adoption of contactless and online payments.
Despite its encouraging landscape, Poland still lags behind most of Europe in its overall digitalization indicators per the European Commission’s Digital Economy and Society Index (DESI) 2020. Scores in digital integration and the use of internet are particularly low, with 60% of Polish companies having a very low level of digitalization, 15% of citizens not online and about half lacking basic digital skills.5 Meanwhile, though Poland remained relatively safeguarded from the EU’s economic nosedive, the pandemic spurred on increased risks in its banking sector, including an increase in write-downs for expected credit losses, institutional weaknesses and the risk of another credit crunch.6
Regulatory initiatives, shifting consumer habits and recovery funds in response to the COVID-19 pandemic could help to prioritize and support digitalization, especially in finance and the economy. The country will receive over 58 billion EUR in grants and loans7 from the EU’s Recovery and Resilience Facility, 20% of which is mandated to go towards digital transformation efforts.
Although Poland’s 2021 digital agenda is basic, it points to serious intentions in further cultivating the fintech ecosystem. Additionally, the central bank is not currently evaluating the possibility of introducing its own central bank digital currency, but is monitoring its peers’ progress. Marek Dietl, CEO of the Warsaw Stock Exchange, is adamant in promoting the development of a digital zloty and strengthening Polish competitiveness.8
Financial Regulatory Authorities
Central Bank: Narodowy Bank Polskink is the central bank of Poland.
Data Protection Authority: The Polish Data Protection Authority (Urzędu Ochrony Danych Osobowych, UODO), created by the Act of 10 May 2018 on the Protection of Personal Data, regulates data protection in Poland per the GDPR.
The Polish Financial Supervisory Authority (Komisja Nadzoru Finansowego, KNF) is Poland’s financial regulatory authority. It oversees and regulates banking, capital markets, insurance, pension schemes and e-money institutions.
Policy, Laws and Regulations
Report on the Development of Financial Innovation, 12 May 2021
The Financial Supervisory Authority published a report addressing the role and actions of the Working Group for Development of Financial Innovation, which was created in 2019. The report outlines barriers to the development of fintech in Poland, actions taken and recommendations on strengthening the fintech ecosystem. Key recommendations include the creation of a regulatory sandbox and clarifications of uncertainties in the regulatory framework. A sandbox could be critical in helping Poland to compete with Scandinavian innovation hubs, which typically enjoy robust government support and safety nets in the launch of startups. In addressing legal, supervisory and regulatory uncertainties, the report points to the Financial Supervisory Authority’s Innovation Hub Program, created in 2018, which connects fintech companies with representatives who can answer questions. An unclear regulatory landscape could deter foreign entities from launching a company or branch in the Polish fintech ecosystem, which has little international influence.9 Regulatory improvements would attract more foreign direct investment, companies and talent to Poland, which already offers sound cybersecurity, a diversified and stable economy, and the region’s largest reserve of IT experts.
Financial Supervisory Annual Report 2020, 12 May 2021
The Financial Supervisory Authority published its annual report addressing its 2020 activities. An overview of the payments sector outlines an increase in the use of cashless payment solutions. The use of card payments and digital wallets, which were popular even before the outbreak of the COVID-19 pandemic, have soared amidst changes brought on by the health crisis. The authority’s main activity in this sector was overseeing the compliance of obliged entities and entities’ admission to the payment services market through licensing and registration.
The report briefly mentions cryptocurrency in addressing education and training on the emergence of new technologies. The KNF does not have any supervisory powers over cryptocurrencies, and issued a January 2021 warning to consumers concerning the risks in crypto investments. The authority pointed to cryptoassets’ volatility, complexity, difficulty in converting back to cash and lack of protective regulations.
Act Transposing 5AMLD Provisions Published, 29 April 2021
The Act of 30 March 2021, Amending the Act on Anti-Money Laundering and Counter-Terrorism and Other Acts, was published in the official gazette. The act transposes some of the 5AMLD provisions onto national law. Namely, it:
- Imposes new requirements on obliged entities regarding documentation storage and security measures for dealings with high-risk third countries
- Spells out procedures for the verification of identity data in the beneficial owners register
- Requires companies and trusts offering currency exchange services between virtual and fiat currencies, as well as providers of virtual currency accounts, to register with the Ministry of Finance
The resolution on Policy for Artificial Intelligence Development in Poland from 2020, published in the Polish official gazette, outlines opportunities for the development of AI alongside guidelines for its usage. The policy is part of the Polish Strategy Productivity and the Modern State 2030 Strategy and outlines six strategic areas, which include short-term, medium-term and long-term goals. Key strategic areas address the relationships between AI and society, innovative firms, international cooperation, the public sector, science and education. The goals are broad and ambitious, and if successful, could draw talent currently flocking to Amsterdam, Berlin and Scandinavia. In strengthening society with regard to tech and AI, Poland seeks to become a large beneficiary of the data-based economy and bolster its digital competence, a crucial goal given low digital literacy. The strategic focus on AI and the public sector will additionally help to integrate innovative solutions into the community at large, with support for the rollout of government programs similar to GovTech Polska, initiatives in trusted data spaces, government computing and increased access to data. To support the development of AI firms, Poland aims to create mechanisms in financing their development, establish sandboxes, increase quantity orders and bolster collaboration between start-ups and the government. Support for the Polish scientific and research community in the development of AI solutions will further expand the fintech landscape. In alignment with the EU’s rights-based approach to AI, the policy also addresses the support of AI businesses alongside adherence with human dignity and fundamental rights per EU and OECD standards. Indeed, international cooperation and standardization will be key as Europe continues to integrate and Poland strives to become more competitive.
The European Commission’s proposed Artificial Intelligence Act, a legal framework to encourage the development of AI solutions while minimizing risk, could supplement or even supersede Poland’s resolution. If passed, the Artificial Intelligence Act would harmonize member states’ rules on AI solutions in order to ensure a “well-functioning internal market,” which would support Poland’s goal in pursuing increased international cooperation and alignment with EU standards. As Poland’s policy does not include a well-articulated risk-based approach to the application of AI systems, the EU’s Act would be particularly beneficial in helping minimize risk in Polish innovation.
1. Bukowski, Paweł and Wojtek Paczos. “Why is Poland’s economy emerging so strongly from the pandemic? A comparison with the UK.” London School of Economics European Politics and Policy, 19 May 2021. https://blogs.lse.ac.uk/europpblog/2021/05/19/why-is-polands-economy-emerging-so-strongly-from-the-pandemic-a-comparison-with-the-uk/
2. “UPDATE 1-Polish economy shrinks in 2020 first time in years, as forecast.” Reuters, 29 January 2021. https://www.reuters.com/article/poland-economy-gdp-idUSL8N2K42VN
3. “Polish Economy Returns to Growth Amidst Pandemic-Related Setbacks.” World Bank, 31 March 2021. https://www.worldbank.org/en/news/press-release/2021/03/31/polish-economy-returns-to-growth-amidst-pandemic-related-setbacks
4. “Unemployment Statistics.” Eurostat. https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Unemployment_statistics
5. “Digital Economy and Society Index (DESI) 2020—Poland.” European Commission. https://digital-strategy.ec.europa.eu/en/library/digital-economy-and-society-index-desi-2020
6. Kość, Wojciech. “Political deal allows Poland to move on EU recovery fund.” Politico, 27 April 2021. https://www.politico.eu/article/political-deal-allows-poland-to-move-on-eu-recovery-fund/
7. Adamowski, Jarosław. “Poland Should Introduce CBDC To Protect Its Economy - Stock Exchange CEO.” Cryptonews, 07 May 2021. https://cryptonews.com/news/poland-should-introduce-cbdc-to-protect-its-economy-stock-ex-10224.htm
8. Kliber, Agata et al. “Triggers and Obstacles to the Development of the FinTech Sector in Poland.” Risks, 01 January 2021.
9. Krajewski, Robert. “Why Poland Should Be The Next Go-To IT Outsourcing For US Startups.” Forbes, 09 June 2021. https://www.forbes.com/sites/forbestechcouncil/2021/06/09/why-poland-should-be-the-next-go-to-it-outsourcing-for-us-startups/?sh=6aa8462074d9
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Last updated: November 2021