In a keynote speech, European Central Bank Banking Supervision set out how it is assessing banks’ growing use of artificial intelligence and the supervisory expectations it attaches to governance and risk management as AI moves from experimentation into core business processes. It reported that its annual data collection across large banks under European supervision shows more than 85% already use AI, with rapid growth in generative and agentic AI and expanding deployment in IT operations, legal and document analysis, and customer-facing and internal tools. The speech highlighted uneven AI governance across institutions and use cases, pointing to the need for clear accountability for AI-driven decisions, effective senior management oversight and robust challenge mechanisms across risk management, compliance and internal audit, consistent with the European Banking Authority’s internal governance principles. It also flagged AI-specific risk management challenges around explainability that supports real decision-making, tighter model lifecycle controls to manage drift, and stronger data governance to address representativeness, lineage and bias, including where bias can translate into prudential impacts. For generative AI, it emphasised increased dependency on a small set of third-party providers and cloud infrastructure, raising concentration risk, vendor lock-in, data security and confidentiality, operational resilience, exit strategies and legal and reputational risks, with links to Digital Operational Resilience Act requirements and the ECB’s July 2025 guide on outsourcing cloud services. Looking ahead, ECB Banking Supervision indicated that, within its supervisory priorities for 2026-28 under the operational resilience and ICT capabilities priority, it will continue monitoring AI while taking a more focused and in-depth approach to generative AI applications to assess prudential materiality and inherent risks and support future supervisory action where needed. It also noted ongoing work to follow developments under the EU Artificial Intelligence Act and participation in the AI Board’s subgroup on AI in financial services.
European Central Bank - Banking Supervision 2026-02-24
European Central Bank Banking Supervision outlines expectations for AI governance in banks and signals more targeted monitoring of generative AI
The European Central Bank Banking Supervision assessed banks' increasing use of AI and related governance and risk management expectations. Over 85% of large banks under European supervision use AI, with significant growth in generative AI across operations. The ECB highlighted challenges in AI governance, risk management, and dependency on third-party providers, planning to focus on generative AI applications and monitor developments under the EU Artificial Intelligence Act.