European banking resilience: As the world edges deeper into geopolitical turbulence and digital complexity, the European banking sector faces an evolving threat landscape—one where cyberattacks and systemic uncertainty are no longer exceptions but constants. At the Delphi Economic Forum X, a candid and technically precise conversation between Christina Papaconstantinou, Deputy Governor of the Bank of Greece, and Korbinian Ibel, General Director at the European Central Bank, tackled this very concern.
Ibel’s warning was clear: resilience is no longer optional—it is structural. “The question isn’t if the crisis will come, but when and from where,” he noted. While the European banking system has made vast strides over the past decade—reducing non-performing loans (NPLs), strengthening capital buffers, and regaining profitability—new threats demand new models of preparedness. Chief among them: cybersecurity and operational resilience in a fully digitised world.
The digital imperative—and the risks that follow
Today, digital transformation is no longer a growth strategy—it’s a survival mechanism. Banks must evolve to remain cost-efficient and client-responsive, but that very evolution increases exposure. “A more digital bank is also more vulnerable,” Ibel emphasised. The risk isn’t limited to external attacks. “Most incidents are not high-profile hacks. They’re internal mishaps—release upgrades gone wrong, faulty data handling, or failed outsourcing processes.”
Cyber resilience, therefore, is not about building impenetrable systems—because that’s impossible. It’s about building recoverable systems. “You can’t prevent every accident or attack, but you must be able to come back online quickly, securely, and fully operational,” he said. This means robust backup infrastructures, strong vendor management (especially in cloud computing), and redundancy planning across all mission-critical processes.
Resilience as architecture: the ‘House of Resilience’ framework
To navigate uncertainty, Ibel presented what he called the “House of Resilience”—a strategic framework every bank should adopt:
Capital Buffers: These remain the bedrock of banking stability. Profitability must not simply be returned to shareholders; it must be partially retained to withstand future shocks.
Balance Sheet Integrity: Cleaning up legacy assets and toxic exposures while times are good is essential. Ibel warned, “Don’t wait for the next crisis—act while you still can.”
Credit Underwriting: A reminder that today’s lending standards determine tomorrow’s NPLs. Greece, he noted, is a success story here, having adopted some of the strictest underwriting standards post-crisis.
Cost Discipline: With much of recent profitability stemming from high interest rates—an external factor—banks must control internal costs aggressively to remain viable when rates fall.
Operational Resilience: At the core of the framework lies digital and cyber resilience. Banks must audit and stress-test their systems, not only for security breaches but for operational continuity.
Geopolitics meets code: crisis as the new normal
The era of isolated crises is over. “Volatility is real-time, and often algorithmically amplified,” Papaconstantinou observed, referring to market fluctuations triggered by a single social media post. In this hyperconnected environment, geopolitical tensions, trade wars, and cyber warfare can create financial tremors overnight.
Cybersecurity, therefore, is no longer an IT issue—it is a supervisory priority. As Ibel put it, “We’ve moved from wondering whether a crisis might come to knowing it’s already on the doorstep.”
Why joint supervision matters more than ever
The session also served as a celebration of the SSM model, now in its tenth year—a joint supervisory mechanism blending national expertise with a European-wide oversight framework. Its success, according to Ibel, proves that “integration creates resilience.” Greece’s own turnaround from 40% NPL rates to profitability is partly a product of this coordination.
But there’s more to be done. The banking union and capital markets union remain incomplete. “We need more Europe,” Papaconstantinou stated, echoing a sentiment that was both institutional and urgent.
A digital shield for an uncertain future
As digitalisation continues to redefine the banking landscape, the resilience of European banks will hinge not only on fiscal health and regulation but on their ability to absorb and rebound from cyber threats. In a world where crises have become continuous, banks must embed resilience into every layer of their operations—from the balance sheet to the cloud server. For European banks, digital agility and cybersecurity are no longer “add-ons”—they are the foundation of trust in an unstable world.
