Competitiveness, Transformation and Growth in Europe’s Financial Sector
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June 18, 2026
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After years of disruption, European banking is entering a period of greater strength but is now under pressure to gain scale, accelerate technological transformation and reinforce its role as a driver of Europe’s strategic autonomy.
The 21 Banking Industry Meeting, co-organised by IESE Business School and FTI Consulting in Madrid, gathered more than 500 senior executives, experts and leaders from the financial sector to discuss the evolution of banking and the capabilities which will define success in the coming years.
One central point emerged clearly from the discussion, that European banking need to respond to an increasingly demanding agenda. Shaped by fragmentation within the eurozone, the industry needs to navigate heightened all while meeting regulatory pressures, triggered by the need of enforcing digital resilience across interconnected markets.1 The industry must also proactively manage AI-driven technological innovation and adapt to the rapid rise of private credit, which increasingly shifts the industry further away from traditional corporate lending.
An overarching takeaway from the meeting was the ability of the European banking sector to retain the critical the infrastructure needed for growth, investment and economic stability will depend on how effectively the industry responds to all these challenges.
European Banking Has Regained Strength, but Still Needs Greater Competitiveness and Integration
The sector has made significant progress in solvency, profitability and resilience. Even so, it continues to operate in an environment shaped by a fragmented European market, insufficient scale compared with other major economic blocs and an incomplete agenda for financial integration.
Advancing the banking union, deepening capital markets and reinforcing a single European market will be essential to mobilise financing for Europe’s major strategic priorities, including defence, reindustrialisation, infrastructures or the energy transition. Without strong, efficient and integrated institutions, Europe will be less able to support investment, innovation and long-term growth.
In that context, regulation remains essential, but it must evolve. A simpler, more proportionate and growth-oriented framework could strengthen banks’ ability to finance businesses, support economic transformation and compete more effectively on the global stage.3 Such an approach reduce administrative burdens and clarify the structural requirements. By consolidating overlapping capital buffers, expanding lighter regulatory regimes to include a broader range of regional and smaller institutions and establishing a non-duplicative data reporting channel, this reformed system can ensure that operational efficiency directly translates into increased lending capacity.
AI Is Now Central to the Banking Agenda
Once purely a tactical lever, confined to back-office operations, AI has become a strategic priority. Its use and impact spans critical areas including productivity, customer experience, risk management, fraud prevention, cybersecurity, talent acquisition and retention, governance and the future design of the banking model itself. In retail banking, for example, AI offers significant opportunities for hyper-by analysing individual customer data in real-time to offer customised savings plans or targeted credit card rewards that match the user’s specific financial behaviour. By providing more relevant, timely and value-add interactions, banks can strengthen their customer engagement, deepen loyalty and maintain closer relationships.
Effective implementation of AI requires a cross-functional approach supported by robust governance, specialist training and meaningful human oversight. It also raises the bar for boards, which must seek a deeper understanding of both the opportunities and risks associated with AI adoption, particularly as AI amplifies cyber threats through sophisticated attacks like deepfakes, voice cloning or automated system breaches.4
Geopolitics Has Become a Core Business Variable
Whilst geopolitics has long influenced the banking sector, it is now a continuously present factor. Complex international relationships and events have a direct influence on investment decisions, supply chain design, industrial strategies and the financing needs of businesses and governments alike.
Meanwhile, intensifying competition in strategic sectors and the repositioning of major geopolitical powers are forcing Europe to rethink its response. Industrial autonomy, trade defence and alliance-building will become increasingly important, as industrial actors must scale up joint procurement and domestic manufacturing capacity to mitigate vulnerability to foreign supply shocks, particularly in defence and industry. To sustain this, the banking sector must develop specialised risk-assessment models for strategic sectors, ensuring credit flows towards building regional resilience and shielding sovereign infrastructure.
The Financing Landscape Will Become Increasingly Diverse
Corporate and project financing will become more diverse. Traditional banks will remain central, but the role of the private credit, alternative financing, capital market, specialist fund and public-private partnership models is set to expand.
This trend does not point to a full-scale replacement of the banking model, but rather to a broader and more complementary ecosystem. In that context, solutions such as the private credit or specialist strategic support model can offer flexibility, execution capability and tailored responses during periods of transformation or restructuring.
Digitalisation Expands Growth Potential but Also Increases Exposure to Risk
Neobanks and fintechs are entering a new phase, one less focused on growth at any cost and more focused on profitability, customer retention and sustainable business models. Value proposition remains decisive, but scale becomes an advantage only when matched by operating efficiency, compliance and trust.
At the same time, digitalisation intensifies certain structural risks. Reputational and liquidity crises can spread faster, fraud continues to evolve and growing technological dependency increases the system’s sensitivity to cyber and operational incidents. Resilience will therefore be as important a competitive advantage as innovation.
Final Thoughts
Discussions at the 21 Banking Industry Meeting reflected a shared conviction that European banking is entering this next chapter from a stronger position, but now it must transform with greater speed and ambition. In our experience working with financial services clients, the banking sector’s competitiveness depends on its ability to gain scale, integrate technology with discipline, boost resilience and broaden its financing sources. Advances such as these will empower European banks to sustain growth, innovation and strategic autonomy in an increasingly complex global environment.
Footnotes:
1: “Supervisory priorities 2026 – 2028,” European Central Bank (November 2025).
2: “The banking sector in the EU continues to show resilience in capital, liquidity and profitability, but geopolitical events could pose significant challenges for the industry,” Public (June 27, 2025).
3: “The banking sector in the EU continues to show resilience in capital, liquidity and profitability, but geopolitical events could pose significant challenges for the industry,” Public (June 27, 2025).
4: “AI cyber security risk ‘top of list’ for banking threats, says UK regulator,” Financial Times (June 4, 2026).
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Published
June 18, 2026
Key Contacts
Head of FTI Consulting Spain and EMEA Interim Management/CRO Services
Senior Managing Director, EMEA Co-Chairman, Co-Leader of France, and Lead of EMEA Financial Services
Senior Managing Director