# ECB Official Says Digital Innovation Is Reshaping Banks’ Competitive Edge

By Riza Dagoc

Canonical URL: https://www.tokenpost.com/news/regulation/25674
Published: 2026-09-30T07:33:24.000Z
Updated: 2026-09-30T07:33:24.000Z
Section: Regulation

> Claudia Buch said AI, tokenization, cloud services and mobile banking may improve efficiency while exposing banks to new competition and operational risks.

European Central Bank Supervisory Board Chair Claudia Buch said digital innovation is reshaping how banks compete, potentially improving efficiency while allowing rivals to capture parts of payments, deposits and lending.

Buch made the comments in a speech delivered Sept. 22, 2026, in Amsterdam. She said artificial intelligence, tokenization, cloud services and mobile banking are changing banks’ business models and introducing cyber, operational, fraud and financial-stability risks.

“Digital innovation may thus change banks’ competitive advantages – it can hinder or boost their business models,” Buch said.

More than 90% of banks directly supervised by the ECB use artificial intelligence in their operations, while 85% use generative AI. Risk mitigation is the leading AI use case; 64% use AI for fraud and cybercrime prevention. More than 80% identify process automation as an important tool for reducing costs.

Digital competition is especially visible in payments. Payment services account for about 28% of banks’ fee and commission income.

“Digital innovation does not necessarily move financial activity away from banks. But it can redistribute value within the financial services chain,” Buch said.

About one-third of banks under ECB supervision report digital-asset activities, including tokenization and crypto-asset custody. Around 30% plan to tokenize deposits, while about 20% plan to issue e-money tokens. Current activity remains limited.

Tokenized deposits record a customer’s claim against a bank on a distributed ledger, leaving the underlying bank-customer relationship unchanged. Permissioned networks restrict participation to identified and authorized users.

Digital banking may also make deposits more responsive to pricing, risk and market stress. Online deposit platforms account for 1% of household and nonfinancial-corporate deposits, although the share can be significant for some smaller banks. Online banking can accelerate extreme outflows during stress, while no increase in normal-time deposit volatility has been identified in the euro area.

Stablecoin growth could also alter bank funding. Under current European Union rules, issuers generally must hold at least 30% of relevant backing funds or reserves as deposits with credit institutions. Wider use could shift funding from retail deposits toward wholesale deposits.

About two-thirds of euro-area banks have cooperation agreements with external technology providers, often based outside the European Union. “As supervisors, we are technology-neutral – not risk-neutral,” Buch said.