On 16 October 2025, the European Central Bank (ECB) published a speech by a member of its supervisory board, Pedro Machado. The speech was given at the Single Supervisory Mechanism (SSM) Conference on Digitalisation and was entitled Time is on our side: Embracing digital change while ensuring stability.

Mr Machado’s remarks focus on three areas:

• Future of banking and emerging digital trends: In summary, the convergence of customer demands, technological innovation, competitive pressures and regulatory changes is transforming the banking industry. To remain resilient and competitive, banks will need to adapt their business models to the opportunities and risks of digitalisation. To strengthen the sustainability of their business models, banks need to define a clear, sound and effective digital strategy, based on a thorough assessment of their business environment.

• Implications for banks in terms of opportunities and risks: In summary, there are a number of opportunities for the most digitally advanced banks. For example, banks can offer a more personalised and seamless customer experience due to the use of data. Another opportunity lies in the ability to harness big data, which can provide insights into customer behaviour, market trends and operational efficiencies. This data-driven approach can lead to more informed decision-making and an increase in the revenue stream. But there are also certain challenges and risks. For example, increased reliance on digital technologies heightens cybersecurity risks and protecting customer data and ensuring the security of online transactions are key. The increased reliance on third-party providers, particularly software developers and cloud service providers, also introduces risks. Managing these relationships and ensuring high-quality, reliable and secure services can be a challenge. Banks must conduct due diligence, establish clear contracts and implement robust outsourcing frameworks.

• Impact of digitalisation on banking supervision: As technology, regulations and banks’ practices evolve, the ECB continues to scale up its capacity with a more targeted approach. Currently, the ECB is assessing the implication of digitalisation for revenue generation and cost efficiency in payments and retail business lines. In parallel, it is evaluating the impact of artificial intelligence (AI) and generative AI on banks’ business models, profitability and risk profiles.