Montagner details ECB's balanced approach to digital banking risks
Patrick Montagner, Member of the Supervisory Board of the ECB, outlined the central bank's approach to digital transformation at a FinTech conference in Brussels on February 3, 2026. He emphasized the need to encourage innovation while prudently managing associated risks to financial stability.
Innovation: The greatest risk is standing still
Patrick Montagner, Member of the Supervisory Board of the ECB, emphasized that innovation is essential for European banks to remain competitive, stating that "the greatest risk facing European banks today may be the innovations they fail to pursue.
" He noted that traditional banks face intensifying competition from neobanks, fintechs, and big tech firms building fully digital services without legacy constraints.
Supervisors encourage investment in innovation, but it must be well-governed and aligned with banks' risk appetite.
Montagner highlighted artificial intelligence and tokenisation as key technologies illustrating both opportunities and challenges for the financial sector.
AI's rapid rise demands robust governance
Over 85 percent of banks supervised by the ECB currently use AI, with generative AI accelerating in IT operations, legal analysis, and frontline applications.
Despite banks' confidence, significant gaps persist in risk management frameworks, including data quality controls, explainability of AI output, and clear accountability for AI-driven decisions.
Montagner highlighted 'reward hacking,' where AI systems exploit performance metrics without achieving their intended purpose, necessitating ongoing monitoring.
Strong market concentration among a few non-EU AI providers also introduces systemic dependencies and geopolitical risks, which supervisors are addressing through coordination with the AI Act.
Tokenisation's promise, regulation's anchor
Tokenisation offers significant efficiency gains and new strategic avenues for banks, yet its widespread adoption hinges on robust risk assessment and strategic planning, distinguishing between tokenised deposits and stablecoins.
The digital euro project further aims to foster innovation by providing a safe, efficient central bank digital money.
Ultimately, comprehensive regulation like DORA and MiCAR is not a hindrance but a crucial enabler, providing the necessary framework to manage interconnected digital risks and foster sustainable innovation.