Pedro Machado, Member of the ECB Supervisory Board, addressed the challenges and opportunities of digitalisation in banking at the 2025 Single Supervisory Mechanism (SSM) Conference. He highlighted how societal, technological, economic, and geopolitical shifts are reshaping banks’ strategies and competitive landscape, with digital transformation as a central driver since the 2010s.
Key trends include the rise of digital payments, customer demand for seamless and personalised services, and the growth of fintech firms, neobanks, and big tech entering the financial ecosystem. Banks are increasingly adopting APIs, cloud computing, open banking, generative AI, blockchain, and embedded finance, creating both innovation opportunities and new risks. Regulatory frameworks such as DORA, MiCAR, the Digital Services Act, and the AI Act are evolving to keep pace with these changes.
Machado emphasised the importance of banks developing clear digital strategies, modernising IT systems, investing in generative AI, and harnessing big data to improve efficiency, customer experience, and revenue streams. He also warned of risks including cybersecurity threats, dependency on third-party providers, legacy system integration challenges, and regulatory compliance demands.
From a supervisory perspective, digitalisation has been a priority since 2022. The ECB has engaged with banks to evaluate the impact of digital transformation on business models, revenue generation, cost efficiency, and risk profiles, especially regarding AI. Collaborative supervision, sharing of best practices, and open dialogue are seen as key to supporting responsible innovation while maintaining financial stability.
In conclusion, Machado stressed that banks must balance digital innovation with customer inclusivity and operational resilience, while supervisors continue to adapt to a rapidly changing financial landscape. The conference provides a platform for dialogue and collective exploration of the path forward in digital banking.
