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EUROPEAN
BANKING SECTOR
FACTS & FIGURES

The wider economy

Structure and economic contribution of the banking sector

Lending and deposits

Banking sector performance

Competitiveness of European banks

Country-by-country overview

Statistical annex

The wider economy

The data has been compiled from publicly available information released by the European Central Bank, European Commission, Eurostat, the European Banking Authority, International Monetary Fund, national competent authorities and members of the European Banking Federation. Unless otherwise noted, all graphs and tables have been produced to illustrate the figures mentioned in the relevant chapters.

After years of moderate but steady economic growth the euro area economy will continue its recovery. The uninterrupted recovery which started in the second quarter of 2013 helped the euro area bloc to grow at 1.6% and at a faster pace in 2016 than the economic expansion in the United States, for first time since the financial crisis. This was also a higher rate than international partners such as Canada (1.4%) and Japan (1.0%) and parallel to the UK (1.8%). The euro area however has a lower expected growth rate for 2017 and 2018 than the EU 28 and the US. The slowdown is driven primarily by political uncertainty in Europe and the US and geopolitical tensions which are presently surrounding the world economy. A realisation of slowing Chinese growth could further hamper growth.

Having increased from 2015 to 2016, private and public consumption growth rates are expected to decrease in 2017 to 1.4% (1.9% in 2016) and 1.2% (2.0% in 2016), respectively. Private consumption nonetheless remains the main driver of growth in the euro area. Aggregate demand will continue to be stimulated by monetary policy. With the global economy continuing to recover, exports are expected to increase by 3.7% compared with 2.7% in 2016, with imports experiencing a marginal increase as well.

Further positive changes in the euro area are expected to materialise in 2017 and 2018. Unemployment is expected to decrease in 2017 from 10.0% to 9.5%, falling to 9.1% in 2018. This remains significantly higher than the US (4.7%) and Germany (3.9%), but represents a positive trend. Wage growth is expected to be 1.6% in 2017, doubling from 2016’s 0.8%, with a further marginal increase expected in 2018.

Rising inflation rates propelled mostly by the increase in the price of Brent oil are expected to bring inflation to 1.6% in 2017, the closest rate to the ECB’s target in over four years, alleviating any remaining concerns about deflation. Core inflation, however, is expected to be only 1.1% in 2017.

These conditions are complemented by a renewed potential for labour and financial market reforms in Europe. The election of President Macron in France is expected to inject new energy into French and German cooperation, especially after Germany’s federal election in September, which could help induce such reforms. Further, the effects of President Junker’s Investment Plan for Europe may also begin to materialise in 2017 and 2018, assisting growth.

With key variables moving in a positive direction, including a better global outlook, the euro area is expected to experience continued growth in 2017 and beyond. However, such conditions are underlined by relatively high and unequal rates of unemployment, especially among youth and minorities. Employment in industry and construction sectors also remain far below their pre-crisis levels. Moreover, while political uncertainty in Europe has declined after the French and Dutch general elections, future elections in Italy, along with continued geopolitical risk in Ukraine, Russia, Turkey, and the Middle East, threaten to bring about new shocks to the European economy. Uncertainty from the United States, not least its positions on trade and international monetary policy, and the level of complexity of the Brexit negotiations and the relative short time in which to reach a final deal could also lead to changes in these expectations.

The Chief Economists’ Group of the European Banking Federation in its Spring 2017 Outlook of the Euro Area Economies in 2017 – 2018 reflects that the current economic outlook remains surrounded by a number of both upside and downside risks with the risks to the growth outlook fairly balanced.

Monetary Policy and Inflation: Why it matters and how it works

Why monetary policy is important

Monetary policy is one of the main responsibilities of a central bank.

The primary aim of monetary policy is usually price stability. In practice, most central banks have set a target for inflation up to, but close to, 2%.

Central banks believe that price stability contributes to achieving high levels of economic activity and employment. This is because high or unstable inflation rates reduce business confidence or certainty and make spending or investment decisions unnecessarily complex, contributing to wasteful activities aimed at preserving wealth or hedging against inflation risk.

Central banks usually have secondary monetary policy aims related to employment and economic growth.

Monetary policy has traditionally centred on the role of the central bank as the sole issuer of banknotes and bank reserves in an economy. This means it can set the conditions at which banks borrow from the central bank i.e. the official interest rates. In this way it can also influence the conditions at which banks trade with each other in the money market and the rates set in lending to and deposit-taking from non-banks.

Through its official interest rates, and the expectations for rates and prices, that its monetary policy has created, a central bank can influence asset prices, saving and investment decisions, credit supply and exchange rates. These in turn affect supply and demand for labour and goods and services while setting expectations for wages and prices.

Since 2009, a number of central banks have expanded their monetary policy instruments to include asset purchase programmes or quantitative easing. These assets may include government or public sector bonds, corporate bonds, asset-backed securities and covered bonds.

Central banks do this mainly to create money, increasing the banks’ reserves and incentivising them to lend more.

How monetary policy works

Interest rates are a central bank’s primary tool to impact economic conditions within a country. Through its use of open market operations, a central bank can effectively set a country’s interest rate, having a direct and indirect impact on a country’s economy.

In the short term, a change in the interest rate directly impacts the domestic return of a given country. Changes in these rates therefore influence the exchange rate of a currency, leading a currency to appreciate if the interest rate in that economy increases, or vice-versa if the interest rate decreases. These changes then alter the country’s purchasing power of foreign goods, which will in turn affect the prices of these goods.

Alterations in the interest rate also affect the interest rates which banks charge consumers, such as mortgage rates or credit card rates. Further, interest rates also have an impact the value of money and the price level of assets. These changes in turn will influence the supply and demand of goods and labour within an economy. Changes in the equilibrium of either of these markets will directly shift the price level within an economy, affecting both wages and domestic prices.

Along with these short-term impacts, changes in a country’s interest rate impact investor expectations as the profitability of future endeavours will change depending on the expected direction of the interest rate. For instance, lower expected inflation rates make it cheaper to borrow funds for a project in the future, leading investors to delay investing until these lower rates are realised. This in turn implies that profits will be expected to rise in the future, leading labour and capital to delay wage increases.

There are, however, certain types of shocks over which a central bank has no control. The most significant of these shocks include important changes to the global economy or changes in fiscal policy within a country. These changes can further be compounded by increased uncertainty within that country, which impacts investor expectations. Other external changes include changes in risk premia, changes in commodity prices, such as through new developments in technology, and changes in bank capital, which may be the result of new bank regulations.

Influencing inflation

With its aim of achieving price stability within the euro area, the ECB strives to ensure that inflation does not exceed the ECB’s target of near, but close to, 2% inflation over the medium term.

As high levels of inflation dilute a person’s real income and their purchasing power, ensuring price stability is a vital aspect of a prosperous economy. As a result, the ECB will react to changes in the European economy by wanting to stimulate or lessen inflation.

Historically, the ECB would use conventional monetary policy to influence inflation by setting interest rates. For instance, to increase inflation the ECB would cut interest rates, stimulating the economy. This is usually done by buying government bonds, which increases an economy’s money supply. However, as has been witnessed since 2008, these tools may not always be effective. Another way to influence inflation is through quantitative easing, where a central bank purchases commercial assets.

The effects of these policies may not always materialise immediately. Consumers take time to adjust to new interest rates, creating a lag between monetary policy and inflation.

Further, inflation can either be measured as “Headline Inflation” or “Core Inflation”. The former includes all goods within an economy, while the latter excludes goods with volatile prices, such as oil. Core inflation can therefore provide a more accurate measure of a country’s long-term price level.

The ECB focuses on achieving its target by measuring headline inflation. While the ECB’s target is arbitrary, setting a clear inflation target allows investors to adjust their expectations.

Structure and economic contribution of the banking sector

The data has been compiled from publicly available information released by the European Central Bank, European Commission, Eurostat, the European Banking Authority, International Monetary Fund, national competent authorities and members of the European Banking Federation. Unless otherwise noted, all graphs and tables have been produced to illustrate the figures mentioned in the relevant chapters.

Number of banks

The downward trend in the number of EU-28 credit institutions, which started in 2009, continued in 2016 falling to 6,596, a decline of 6% compared to the previous year and a reduction of 1,929 in total since contraction started. Most of the consolidation has occurred within credit institutions legally incorporated into the reporting country, where the stock has fallen by 26% since 2008. This trend includes factors such as mergers in the banking sector with a view to enhancing profitability and greater economies of scale.

The countries having experienced the largest contraction in absolute terms in 2016 were the Netherlands (-113 units), Germany (-72 units), and Austria (-63 units), according to the ECB. Only Slovakia (+2 units) increased the number of credit institutions while Sweden remained unchanged. The number of credit institutions in the EFTA countries fell from 423 to 418 in 2016.

Branches and subsidiaries

The rationalisation taking place in the EU banking sector also involved bank branches as the number of bank branches continued to shrink, falling to about 189,000 by the end of 2016. The total loss of more than 48,000 branches closed since 2008 equals a contraction of 20.4%. Compared to the previous year, branches in the EU-28 decreased by 4.6% or about 9,100 branches.

As the overview of payments and digital banking shows, banking customers have widely and enthusiastically adopted electronic payments as well as online and mobile banking. This has reduced the importance of widespread bank branch networks, allowing banks to scale back their physical presence.

Although the overall number of subsidiaries continued declining for the ninth consecutive year, falling by 2.9% to 601, the lowest level since the ECB’s data series began in 1999. While the number of subsidiaries of credit institutions from other EU countries fell by only five in 2016, the total of 343 was 38% below the peak in 2001. The 4.8% drop in the number of non-EU credit institutions’ subsidiaries was the sharpest year-on-year fall since 2004 and, at 258, reached the lowest level since 2006.

Bank staff

By end-2016, EU-28 banks employed about 2.8 million people, about 50,000 fewer than in 2015 and the lowest level since the ECB’s data series began in 1997. The five largest EU economies continue to be the five countries with the largest number of employees in the banking sector employing some 68% of the total EU-28 staff employed. Including EFTA countries, the number of staff employed in the banking sector was more than 2.95 million.

Also reflecting a contraction in the banking sector, the average number of inhabitants per bank staff in the EU Member States rose from 179 in 2014 to 183 in 2016.

Economic contribution

Banking and related financial services activities make a significant contribution to the EU’s economy.

Despite the drop in bank employment in recent years, about one in every 100 jobs in the EU was a banking job in 2016.

In the past decade, between 3% and 4% of the value of compensation of employees and gross value added in the EU economy has come from financial services (excluding insurance and pension activities).

Lending and deposits

The data has been compiled from publicly available information released by the European Central Bank, European Commission, Eurostat, the European Banking Authority, International Monetary Fund, national competent authorities and members of the European Banking Federation. Unless otherwise noted, all graphs and tables have been produced to illustrate the figures mentioned in the relevant chapters.

General trends

The core banking activities of raising deposits from and providing credit to customers are crucial to Europe’s banks. Despite deleveraging by European consumers and businesses, bank deposits and loans grew in 2016.

Deposits

Deposits accounted for 51.3% of monetary financial institution (MFI) liabilities in the EU by the end of 2016. Deposit liabilities in the EU fell by 0.7% to €22.1 trillion. Some of the decline may be attributable to the impact of exchange rate fluctuations on non-euro area values. For example, the euro significantly increased in value against the UK pound sterling during 2016.

EU deposits have averaged €21-22 trillion since 2008.

Deposits from other MFIs peaked at €8.1 trillion in 2007 and fell to €6.4 trillion by the end of 2016. However, their fall has been more than offset by growth in deposits from non-MFIs, excluding central government.

Total deposits from non-MFIs, excluding central governments, grew by 1.2% in 2016 to €15.9 trillion in the EU at the end of 2015, with €11.8 trillion in deposits in the euro area. This compares with €11 trillion and €7.9 trillion, respectively, in 2006.

The growth has been driven by an increase in deposits from households (including non-profit institutions serving households), which rose by 1.7% year-on-year to €8.9 trillion and non-financial corporations (NFCs), up by 3.7% to €3.0 trillion.

Within household and NFC deposits, there has been a clear shift to shorter-term deposits. Overnight deposits accounted for 53.1% of household and 76.8% of NFC deposits in the EU at the end of 2016, up from 41.5% and 64.0%, respectively, in 2011.

Loans

The total value of loans outstanding from EU MFIs increased by 0.3% in 2016 to €23.6 trillion, the highest level since 2012. The increase derived from growth in loans to other MFIs and non-MFIs in the euro area as well as an increase in loans to non-MFIs in other EU Member States. Some of the decline in loans in other EU Member States is likely attributable to the euro vis-à-vis UK pound sterling.

Some 77.2% of on-balance sheet household lending in the EU supported house finance in 2016.

Loans to EU households fell by 0.9% in 2016 to €7.6 trillion, reflecting mainly the drop in non-euro area values.

Loans to households in the euro area grew for the second successive year, adding some €200 billion on loans outstanding since 2014.

Non-financial corporation (NFC) loans outstanding fell by 0.5% in 2016 to €5.2 trillion.

The concentration of NFC loans in the euro area has changed slightly since 2012. Real estate activities, professional, scientific and technical activities and administrative and support service activities accounted for 34% of loans outstanding at the end of 2016, up by 32% in 2012. Manufacturing and the wholesale and retail trades also increased their shares. Construction fell from 13.3% of loans outstanding to 9.4%, likely a reflection of deleveraging in the sector.

Results from the ECB’s Bank Lending Survey in 2016 suggested a generally improving environment for small and medium-sized enterprises (SMEs) and large enterprises. Credit standards eased somewhat in most quarters from the start of 2014 for both segments.

Loan demand among SMEs has grown since Q4 2014, with the net weighted percentage reaching 27.9 in Q1 2016 before easing back.

These trends point to a healthy appetite for new NFC lending and an accommodative banking sector.

The Role of Banks: lending and payments

Banks act as facilitators between those who have money and those who need money, while also providing the systems for funds to flow between payers and payees.

The primary role of banks is to take in money from those with cash in hand and to lend money to borrowers. Banks then receive loan repayments which can be used in new lending to other borrowers.

The traditional view of this process has been that banks “create” money by providing some of the money on deposit in the form of loans to borrowers, which returns to the banking system as deposits. This money can then be lent again and again, resulting in a multiplier effect. More recently, money creation has focused on how lending creates bank deposits i.e. whenever a bank provides a loan to a customer, a deposit is created.

Banks cannot lend freely without limits. They have to be able to lend profitably in a competitive market, while also managing liquidity risks (i.e. that they have sufficient liquid assets to repay depositors or investors when required) and credit risks (that some borrowers may not repay their loans). These lending activities are regulated and safeguarded by global/international standards and EU regulations.

Just as money can be created, it can also be destroyed. For example, in the case of a mortgage being used to purchase a second hand property, the purchaser could use the proceeds from the sale to pay an existing mortgage, effectively bringing the amount of money created back to zero.

Banks are also key players in national and international payment systems. Some 112 billion cashless payments were made by customers of EU credit institutions in 2015. Almost half (53 billion) of those were card payments, while about a quarter were credit transfers (29 billion) or direct debits (24 billion).

The Single European Payments Area (SEPA) aims to harmonise and integrate payment markets across Europe, with one set of euro payment instruments: credit transfers, direct debits and payment card, common standards and practices and a harmonised legal basis. SEPA covers more than 520 million people in the 28 EU Member States and six non-EU countries (Iceland, Liechtenstein, Monaco, Norway, San Marino and Switzerland).

Banking sector performance

The data has been compiled from publicly available information released by the European Central Bank, European Commission, Eurostat, the European Banking Authority, International Monetary Fund, national competent authorities and members of the European Banking Federation. Unless otherwise noted, all graphs and tables have been produced to illustrate the figures mentioned in the relevant chapters.

Bank capital

The recapitalisation effort that European banks have made in recent years is bearing fruit as EU banks show a solid capital position and have continued to strengthen their balance sheets making the European banking sector more resilient and robust. Figures indicate that for one more year banks continue increasing capital.

The core equity Tier 1 (CET1) ratio of EU banks on a fully loaded basis at June 2016, which includes only capital of the highest quality, is 12.8%, more than double the same ratio in 2011 and 1% more than the previous year. Banks in the European Union have reduced the original total capital shortfall ratio by more than €500 billion from 2011 mainly by raising new capital and retaining earnings. Tier 1 and total capital have also shown a positive trend practically doubling the same ratio in 2011.

Bank funding

Although the ratio of deposit liabilities to total assets slightly decreased in 2016 from 51.5% to 51.3%, the overall rising trend, since 2007 (47.3%), reveals bank shifts towards greater reliance on deposits as a source of funding. While the direction in trend has slightly fluctuated over the last four years it remains over the 50% mark every year.
The rise in the share of non-banks’ deposits to total assets has continued moving upwards, rising from 36.7% in 2015 to 37.2% in 2016. An upward trend since 2007 (29.1%) only falling in 2011.
The country breakdown for total deposits shows the lowest shares recorded in 2016 were in Denmark (28%), Ireland (30%), Sweden (35%) and Finland (37%). The figures continue to reflect, in part, different banking models, for example the well-developed covered bond markets in Scandinavia. Meanwhile countries with the largest shares of deposits financing banking sector’s assets were Bulgaria (71%), Slovenia (73%), Slovakia (74%) and Lithuania (75%).

Assets

The amount of total assets held by EU banks contracted for a second consecutive year in 2016. This time by €197 billion or -0.5% from the previous year amounting to €43.18 trillion (€30.9 billion in euro area and €12.2 billion in non-euro area countries). While there was a modest gain in the total assets in the euro area (0.53%) this was offset by a drop (0.46%) of total assets held by banks in the non-euro area countries, which was partly attributable to exchange rate movements.

Considering the country breakdown, the countries with the strongest boost in absolute terms were Lithuania with €2.2 billion (9.2%) and Czech Republic €17.4 billion (8.5%). The four largest European countries registered mix results in their stock of assets with France and Germany increasing by 2.2% and 1.7% respectively, Italy, practically at the same level as 2015, with a minimal 0.1% increase and Spain showing a reduction of 3.6%. The countries with the most significant reductions in their stock of assets were Greece (-8.9%) and Latvia (-7.8%).

Bank profitability

In times of low interest rates, profitability becomes a key challenge banks face. With ECB’s ultra-low interest rates, banks in the European Union do not escape this challenge. The return on equity (ROE) – a key indicator to assess the bank sector’s attractiveness for investors – was 3.5% in 2016 for EU 28, down from the 4.3% seen in 2015. After a sharp contraction in 2008 to -1.5% from 10.6% in 2007 due to the impact of the financial crisis, the ROE of European banks has been slowly recovering with the latest setbacks in 2011 and 2012 when the ratio fell again into negative territory.
With regard to country figures, Italy (-7.51), Greece (-7.74) and Portugal (-5.53) have a negative ROE. Countries at the top of the list of European banking systems include Latvia (14.34%) and Hungary (12.13%).
The ROE across EU countries has diverged since 2007 signalling growing fragmentation particularly across the euro area. After reaching a peak in 2013 (25.8), the dispersion around the average ROE has substantially decreased falling to 7.4 in 2015 and further into 2016 to 5.7, the closest so far to the 4.5 seen in 2007 before deviation started.

Competitiveness of European Banks and Financial Technology

The data has been compiled from publicly available information released by the European Central Bank, European Commission, Eurostat, the European Banking Authority, International Monetary Fund, national competent authorities and members of the European Banking Federation. Unless otherwise noted, all graphs and tables have been produced to illustrate the figures mentioned in the relevant chapters.

The European banking sector continued its positive recovery in 2016, with the recapitalisation of EU banks completed and financial fundamentals improving.

However, the tightening grip of new regulations, along with the disbursement of new technologies, presents banks with new challenges and opportunities.

Regulations have led to increased capital and liquidity needs for banks, placing pressure on profitability with the cost of equity (COE) exceeding the ROE since 2008. This ROE gap has created an unsustainable environment for EU banks, making it difficult for these banks to be profitable.

This development is compounded by a low price-to-book ratio, and a rise in operational costs resulting from increased compliance and reporting.

According to a confidential survey to senior executives of European banks the following challenges constitute the most significant ones facing EU banks:

  1. Capital requirements
  2. Reporting requirements
  3. Liquidity requirements

Market conditions have presented challenges for banks across the world, but a gap has begun to emerge between the bank indices of US and EU banks, with significantly fewer European banks finding themselves among the top 30 largest banks worldwide, compared to before the crisis.

Improving economic conditions in Europe have contributed to, and will continue to aid, the recovery of the European banking sector. But populist sentiment in Europe has made it difficult for policymakers to implement needed fiscal reforms, not least in the euro area.

Despite these challenges, the EU remains a favourable environment for banks.  According to EBF members, the presence of the Single Market, the euro, and the uniform regulatory framework are all beneficial aspects of operating in the EU.

EBF members also agree that digitalisation is one of the main methods for banks to increase their competitiveness, with 90% of banks stating that digitalisation is a priority for them. The growth of FinTech and digital payment solutions provide particularly interesting opportunities.

Digitalisation also comes with a downside, especially with the displacement of IT and administrative services within banks growing. Despite these drawbacks, banks are usually at the forefront of technological development, and should be encouraged to continue this innovation moving forward.

Other challenges to operating in the EU, beyond those already mentioned, include the prevalence of negative interest rates and the incomplete integration of the euro area.

Financial Technology

Digital transformation

The digital transformation of European banks continues with banks projected to spend in excess of €62 billion on IT in 2017[1].

New technologies in a variety of fields provide banks with the opportunity to increase their revenue and reduce cost, especially important in an increasingly regulated environment. According to McKinsey, upwards of 30% of costs can be eliminated by digitalisation.

By 2018, banks in Western Europe are estimated to receive over half of new revenue from digital sales[2].

These developments are also beginning to appear in consumer’s expectations and behaviour. According to the Commission, in 2016, 45% of consumers in the EU-28 had purchased a good online within the past three months, an 88% increase from 2008.

Digital banking services remain a strategic priority for European banks, with 61% of European banking executives viewing investments in technology as very important[3].

The internet, cloud-based solutions, and the mobile phone are the primary drivers of these innovations. But the rise of machine learning, artificial intelligence, and the internet of things (IoT) provide interesting opportunities for future developments.

Challenges do remain. Differing tax systems within the EU, as well as significant discrepancies between countries in their adoption of these technologies, provide room for future improvement.

Banks are also finding solutions to speed up their payments’ processing systems. Driven by EU regulatory frameworks (PSD2), European banks are leading globally in terms of the implementation of real-time payments.

Policy changes could also help foster growth. Notably, the creation of a Digital Single Market could create over €415 billion in additional growth and 3.8 million new jobs in the EU[4].

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[1] CBR (2015). European bank IT spending gaining momentum by 2017. Retrieved from: http://www.cbronline.com/news/european-bank-it-spending-gaining-momentum-by-2017-4511839/

[2] McKinsey (2016). Strategic choices for banks in the digital age. Retrieved from: http://www.mckinsey.com/industries/financial-services/our-insights/strategic-choices-for-banks-in-the-digital-age

[3] Ernst & Young (2016). European banks reposition for a long-term environment of low growth. Retrieved from: http://www.ey.com/Publication/vwLUAssets/EY-ebb-2016-infographic/$FILE/ey-ebb-2016-infographic.pdf

[4] European Commission (2015). EU Digital Single Market: a Strategy to build and sustain Trust. Retrieved from: http://ec.europa.eu/justice/newsroom/news/150429_en.htm

Banks embracing financial technology

Financial technology, also known as FinTech, provides unique opportunities for both banks and consumers. For instance, peer-to-peer payment apps, which are being widely adopted by banks, make it easier for consumers to send money to each other, while new risk management services which utilise data provide banks with an advantage over other firms in this changing environment.

Other emerging technologies are also entering the financial landscape and show promising signs of useful application. European banks are strategically investing in several FinTech solutions and firms including wealth management, lending, payments, regulatory technology, and distributed ledger technology, with 92% of banks investing in blockchain technology and 62% of banks investing in financial services software and regulatory technology[1].

Banks are also finding solutions to speed up their payments’ processing systems. Driven by EU regulatory frameworks (PSD2), European banks are leading globally in terms of the implementation of real-time payments.

[1] CBInsights (2017). Where Top European Banks Are Investing In Fintech In One Graphic. Retrieved from: https://www.cbinsights.com/blog/europe-bank-fintech-startup-investments/

Cybersecurity

A notable challenge accompanies technological developments. Cyberattacks are increasing in both frequency and sophistication, and financial institutions remain a prime target. Cybersecurity today is the most important IT risk for banks in Europe. 56% of bankers said that they were planning to enhance cybersecurity in their firm, a nine percentage point increase over the past three years[1].

Malware attacks are a significant threat across the entire world. In Q1 2017 alone, Kaspersky Lab reported that it blocked nearly 500 million attacks launched from the web[2]. While Europe performs comparatively better than most other parts of the world, 13.9% of German web users were still attacked by malware, the lowest percentage in Europe. Greece topped EU member states with 28.21% of web users attacked.

Mobile banking applications are also targets of malware attacks. However, globally, the percentage of users affected by these attacks is very low. In Russia, the country with the highest proportion of attacks, only 1.64% of mobile banking users were attacked.

With security being a top concern for consumers, and any attack damaging trust in a bank, public and private investments in technologies, which counteract these attacks, are crucial.

As part of its new cybersecurity initiative, the EU announced in 2016 that it will invest over €450 million in cybersecurity, with private-sector partners further contributing three times that amount.

Other security-enhancing developments include the adoption of blockchain, with over 77% of financial institutions expected to adopt it by 2020, and biometric authentication, which provide an additional layer of protection for consumers and banks[3].

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[1] Ernst & Young (2016). European banks reposition for a long-term environment of low growth. Retrieved from: http://www.ey.com/Publication/vwLUAssets/EY-ebb-2016-infographic/$FILE/ey-ebb-2016-infographic.pdf

[2] Securelist (2017). IT threat evolution Q1 2017. Statistics. Retrieved from: https://securelist.com/it-threat-evolution-q1-2017-statistics/78475/

[3] PWC (2017). Redrawing the lines: FinTech’s growing influence on Financial Services. Retrieved from: http://www.pwc.com/gx/en/industries/financial-services/fintech-survey/report.html

Data on national banking sector

Statistical annex

All figures as at 31 December 2016

The data has been compiled from publicly available information released by the European Central Bank, European Commission, Eurostat, the European Banking Authority, International Monetary Fund, national competent authorities and members of the European Banking Federation. Unless otherwise noted, all graphs and tables have been produced to illustrate the figures mentioned in the relevant chapters.