Digital Euro: Banks face Huge Expenses, According to PwC Report
Research Findings on Digital Euro Implementation Costs - Research findings indicate significant expenses associated with implementing a digital euro.
In a recent study by consulting giants PricewaterhouseCoopers (PwC), it's revealed that the introduction of the digital euro will cost European banks a staggering sum. Detailed examinations of 19 banks resulted in estimated changeover costs surpassing €2 billion. Extrapolating these figures for the entire eurozone could result in costs ranging between €18 to €30 billion, depending on the scenario.
The study was commissioned by the European Credit Sector Associations (ECSAs).
Digital Euro: Not Coming Soon
The eurozone's currency guardians have been exploring a digital version of the European common currency for years. A digital euro is aimed at challenging private providers, predominantly from the US, like PayPal, Mastercard, and Visa, that currently dominate Europe's digital payment market.
Most German banks and savings banks are hesitant about the digital euro's introduction. They argue that it's unclear what specific advantages the digital euro offers compared to existing payment methods. Established systems such as real-time transfers already fulfill many speed and security requirements. A parallel system could mainly result in additional costs and complexity without providing a discernible added value for customers.
Numerous expense areas
The PwC study delves into the expenses the digital euro would impose on banks. Some key cost drivers are:
- Modifying Mobile Banking Apps and Online Banking: Banks need significant investments in technology and infrastructure to update their digital platforms to accommodate the digital euro.
- Payment Cards and Retail Terminals: Introducing the digital euro necessitates adjustments to existing payment cards and terminals, increasing costs.
- ATM Infrastructure: Each bank is estimated to spend approximately €9 million in adapting ATMs for the digital euro.
- Human Resources: The digital euro's introduction could bind almost half of the available skilled workforce for years, potentially delaying payment transaction innovations due to staff shortages.
- Operational Complexity: The digital euro could add burden and costs for banks because of the perceived limited benefits compared to real-time transfer systems[1].
[1] Enrichment Data: This refers to the complexity and potential added workload associated with the digital euro, which banks perceive as excessive given the purported minimal advantages over existing real-time transfer systems.
- The significant costs associated with modifying mobile banking apps and online banking to accommodate the digital euro are highlighted as a key cost driver in the PwC report, requiring substantial investments in technology and infrastructure.
- Additionally, the implementation of the digital euro necessitates adjustments to existing payment cards and terminals, which increases costs for businesses, as stated in the study by PricewaterhouseCoopers (PwC).
