LONDON, Sept 21 (Reuters) - Regulators have little understanding of risks from banks setting up digital marketplaces and need a framework for spotting potential contagion if things go wrong, the European Union’s banking watchdog said on Tuesday. So-called platformisation refers to banks creating a digital marketplace for their products and services, and non-banking services, part of the wider digitalisation of finance which has accelerated since the pandemic began. Reliance on digital platforms, however, for marketing and distribution of services creates new forms of financial, operational and reputational interdependencies, it said. While there is no need for new legislation at this stage, the trend is posing “some challenges” for regulators in monitoring market developments and any risks from interdependencies. “Indeed, it appears that the vast majority of competent authorities currently have a limited understanding of platform-based business models,” EBA said. Reporting by Huw Jones. Editing by Jane Merriman