Digital, Innovation, Payments
Digitalisation and innovation: unlocking the EU banking sector’s competitive edge
Published on 29 April 2026
As the European Commission assesses the competitiveness of the EU banking sector, digitalisation and innovation are emerging as key drivers of future growth.
Summary
In its response to the consultation, the ABBL highlights that while European banks are actively transforming, their ability to scale innovation remains constrained by structural and regulatory challenges.
A transformation across the banking value chain
Digitalisation is fundamentally reshaping business models, operations and client relationships. Across the value chain, banks are integrating advanced technologies such as artificial intelligence, cloud computing and data analytics to automate processes, strengthen risk management and deliver more personalised services.
This transformation is improving efficiency while responding to rapidly evolving customer expectations for seamless, real-time and digital-first financial services.
At the same time, innovation is extending beyond customer interfaces. New infrastructures and products are emerging, including tokenisation of assets, distributed ledger technologies (DLT) and new forms of digital money. These developments have the potential to enhance market efficiency and reshape key financial processes such as payments, settlement and asset servicing.
Scaling innovation: a fragmented landscape
However, the ABBL underlines that the EU’s fragmented landscape remains a major obstacle to scaling these innovations. Divergent national rules, inconsistent supervisory practices and overlapping regulatory frameworks continue to limit cross-border deployment of digital solutions.
As a result, banks face reduced economies of scale, duplicated investments and slower diffusion of innovation across the Single Market.
Investment capacity is another key constraint. While EU banks are dedicating significant resources to digital transformation, a large share of their budgets is still absorbed by compliance requirements, reporting obligations and legacy systems.
This limits their ability to invest in transformative technologies such as AI industrialisation, data platforms or cloud migration at the scale required to remain globally competitive.
A rapidly evolving competitive landscape
Digitalisation is also reshaping the competitive environment. New players, including BigTech firms, are entering financial services with scalable, platform-based models.
While this brings benefits in terms of innovation and customer experience, it also raises concerns around regulatory asymmetries, data concentration and systemic risks.
Beyond competition, trust remains a cornerstone of digital finance. Strengthening cybersecurity, ensuring robust data protection and improving fraud prevention are critical to maintaining client confidence.
Clear and consistent regulatory frameworks, particularly in areas such as artificial intelligence and data use, are equally important to provide legal certainty and support the adoption of digital financial services.
A coherent European approach is needed
Looking ahead, the ABBL calls for a coherent European approach to digitalisation, combining harmonisation, proportionality and support for innovation.
This requires not only reducing fragmentation but also creating the conditions for banks to scale digital solutions efficiently across the EU.
Digitalisation is a powerful driver of competitiveness for European banks. To fully unlock its potential, we need a coherent, proportionate and innovation-friendly regulatory framework that allows banks to scale solutions across the Single Market while maintaining trust and resilience.
Andrey Martovoy
Senior Adviser - Innovation & Digital, ABBL
Unlocking Europe’s digital potential
Ultimately, digitalisation represents a major opportunity for Europe. By addressing fragmentation, simplifying the regulatory environment and fostering innovation, the EU can strengthen the competitiveness of its banking sector and ensure it remains a key enabler of economic growth and strategic transformation.
Against this backdrop, translating strategy into concrete action becomes essential.
From strategy to action: ABBL priorities
To unlock the full benefits of digitalisation and strengthen the competitiveness of the EU banking sector, the ABBL identifies several priorities:
Accelerating harmonisation and interoperability
Promote supervisory convergence and support the development of common infrastructures such as instant payments and digital identity, while ensuring interoperability with emerging technologies, including DLT-based systems.
Supporting innovation in post-trade and settlement
Encourage the adoption of DLT and tokenisation to improve efficiency and cost-effectiveness, and prioritise the harmonisation of settlement cycles and payment interfaces, including CBDC-related solutions.
Streamlining reporting through an EU Integrated Reporting System
Implement a “define once, report once” principle, for instance a single-entry point under Digital Omnibus, by creating a common data dictionary and aligning regulatory frameworks to eliminate duplications and inconsistencies.
Ensuring proportionate, risk-based supervision
Tailor supervisory requirements to the size and complexity of institutions and avoid duplicative ICT and operational resilience requirements that hinder the scaling of digital services.
Providing legal certainty for AI and digital innovation
Align key frameworks such as the AI Act and GDPR, particularly on automated decision-making and transparency, and support innovation through technology-neutral supervision and regulatory sandboxes.
Andrey Martovoy
Senior Adviser - Innovation & Digital, ABBL
Published on 29 April 2026