European Central Bank emphasizes digital innovation’s impact on banks’ resilience

Europe’s central bank is sending a clear message to the continent’s lenders: digitize thoughtfully, or get left behind. The European Central Bank has doubled down on its stance that digital innovation, when paired with strong governance and strategic investment, is essential for banks to remain resilient and competitive in a financial landscape that looks less like traditional banking every year. The push comes as cyber incidents among major banks doubled between 2022 and 2024, and non-bank financial entities continue chipping away at services that were once the exclusive domain of licensed institutions. The ECB’s response is a multi-pronged strategy spanning new regulation, a sovereign digital currency, and infrastructure for tokenized finance. DORA is here, and banks are already feeling it The Digital Operational Resilience Act, known as DORA, became applicable in January 2025. It requires banks to actively manage their information and communications technology risks and report major incidents to supervisors. The regulation arrived at an opportune moment. A striking 38% of bank incidents in 2025 were linked to IT changes, suggesting that banks’ own modernization efforts are, some...