ECB Officials Warn of Digital Risks as Banks Adopt New Tech
European Central Bank (ECB) Supervisory Board Chair Claudia Buch emphasized that digital innovation is significantly reshaping how banks compete, potentially improving efficiency while allowing rivals to capture parts of payments, deposits, and lending.
Buch highlighted various technologies driving this change, including artificial intelligence, tokenization, cloud services, and mobile banking. These innovations are introducing cyber, operational, fraud, and financial-stability risks, and may hinder or boost banks' business models.
According to Buch, over 90% of banks directly supervised by the ECB use artificial intelligence in their operations, while 85% utilize generative AI. Risk mitigation is a leading AI use case, with 64% using AI for fraud and cybercrime prevention. Additionally, more than 80% identify process automation as an important tool for reducing costs.
Buch noted that digital competition is particularly visible in payments, which account for about 28% of banks' fee and commission income. She also stated that digital innovation does not necessarily move financial activity away from banks but can redistribute value within the financial services chain.