On 16 May 2024, the Basel Committee on Banking Supervision (Basel Committee) published a report on the implications of the digitalisation of finance on banks and supervision.

The report builds on the Basel Committee’s 2018 paper, Sound practices: implications of fintech developments for banks and bank supervisors and takes stock of recent developments in the digitalisation of finance.  The report considers both the benefits and risks of new technologies and the emergence of new technologically enabled suppliers for the provision of banking services. It identifies eight implications for banks and supervisors relating to macro-structural elements, specific digitalisation themes, and capacity building and coordination.

The report further reviews the use of key innovative technologies across various aspects of the banking value chain, including application programming interfaces, artificial intelligence and machine learning, distributed ledger technology and cloud computing. It also considers the role of new technologically enabled suppliers (eg big techs, fintechs and third-party service providers) and business models.


It highlights that while digitalisation can benefit both banks and their customers, it can also create new vulnerabilities and amplify existing risks. These can include greater strategic and reputational risks, a larger scope of factors that could test banks’ operational risk and resilience, and potential system-wide risks due to increased interconnections. Banks are implementing various strategies and practices to mitigate these risks, but effective governance and risk management processes remain fundamental.

Digitalisation raises regulatory and supervisory implications for both banks and supervisors. These include:

  • monitoring evolving risks and adopting a responsible approach to innovation;
  • safeguarding data and implementing robust risk management processes; and
  • securing the necessary resources, staff and capabilities to assess and mitigate risks from new technologies and business models.


Among other things the report notes that effective governance structures and risk management processes are fundamental to identifying, monitoring and mitigating risks associated with the digitalisation of finance. Structures and processes may include:

  • Robust strategic and business planning processes that allow banks to adapt their business strategies to consider the potential impact new technologies and market entrants may have on their revenue. Many banks are investing heavily to improve their own digital capabilities and improve their overall cost efficiency.
  • Staff development processes that ensure that bank personnel have the appropriate awareness and capability to manage financial technology risks.
  • Sound new product approval and change management processes to appropriately address changes not only in technology, but also in business activities.
  • Risk management processes in line with the Basel Committee’s revisions to the Principles for the sound management of operational risk and Principles for operational resilience that are relevant to financial technology developments.
  • Processes for monitoring and reviewing new products, services or delivery channels for compliance with applicable regulatory requirements, including, as appropriate, those related to consumer protection, data protection and anti-money laundering/countering the financing of terrorism. Outcomes under a range of contingencies are considered and are legally enforceable.
  • Robust strategic IT processes that define how the bank’s IT landscape should adapt to support the business transformation.
  • Effective risk management and control environments that address new sources of risk stemming from all risk areas.

Next steps

The Basel Committee will continue to monitor developments related to the digitalisation of finance. Where necessary, it will consider whether additional standards or guidance are needed to mitigate risks and vulnerabilities.