EBA harnesses digital data for banking risk assessment
The European Banking Authority (EBA) recently conducted its 2023 stress test, providing a comprehensive assessment of the European banking system’s resilience and vulnerabilities. Notably, the data underpinning this evaluation is sourced from digital regulatory data, demonstrating the utility of digital technology in supervision.
The stress test reveals a mixed landscape shaped by macroeconomic uncertainty, emphasising operational risks, including geopolitical tensions and digitalisation vulnerabilities. While banks demonstrated resilience following last March’s banking turmoil, elevated interest rates pose a challenge by impacting lending. The report also outlines the growing concern for climate and ESG risks, which are influencing banks’ focus and sustainability efforts. Despite challenges, signs of asset quality deterioration are limited, with NPL ratio at an all-time low of 1.8%.
The risk assessment report is accompanied by EBA’s EU-wide transparency exercise, offering detailed insights through a dataset comprising over 1.3 million comparable, accessible data points. EBA’s utilisation of digital regulatory data demonstrates the efficiency of digital data collection and analysis. As financial institutions continue to embrace digitalisation, the integration of such data-driven insights will continue to underpin a more resilient banking ecosystem.
For a deeper understanding of the stress test results, explore the detailed report.
