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Digital Euro Revolution: Risk of cost explosion for banks!
PwC study warns of high costs for banks when introducing the digital euro, which could be between 18 and 30 billion euros.
Digital Euro Revolution: Risk of cost explosion for banks!
The discussion about the introduction of the digital euro is gaining momentum after a recent study by PwC predicted significant costs for European banks. The research, carried out on behalf of the three European Credit Associations (ECSAs), estimates the cost of change for 19 banks analyzed to be over two billion euros. This would be just the beginning, as the total cost for the euro area could be between 18 and 30 billion euros, depending on the scenario T Online reported.
A central goal of introducing the digital euro is to be able to compete in the digital payment market with established private providers such as PayPal, Mastercard and Visa. Despite these ambitions, many banks and savings banks in Germany are critical of the introduction. The reason for this is the lack of clarity about the specific additional benefits of the digital euro compared to existing payment methods, which already meet high requirements in terms of speed and security.
Costs and challenges
Introducing a parallel payment system carries the risk of additional costs and complexity. The main cost drivers for banks are the adaptations of mobile banking apps, web banking solutions, physical payment cards and payment terminals. In particular, the adjustment of the ATM infrastructure is estimated to cost an average of 9 million euros per bank. Personnel costs could also be significant, as the introduction of the digital euro could potentially retain almost half of the available skilled workers for years.
This personnel shortage could in turn hinder innovation processes in payment transactions, which would be problematic for banks and the entire financial sector. BVR also highlights that current systems such as real-time transfers already cover the necessary requirements, so the need for a digital euro appears questionable.
Overall, it remains to be seen whether and how the European financial landscape will respond to the challenges posed by the introduction of the digital euro. Not only economic but also technological aspects are the focus of the discussion.