The European Central Bank has published a blog post on how digital banks are changing monetary policy transmission in the euro area. Drawing on supervisory data for more than 170 digital banks from 2016 to 2025, it finds that during the 2022-23 tightening phase these institutions raised household deposit rates faster and by more than comparable branch-based banks, while their loan rates increased by about the same amount as peers, making transmission stronger on the funding side than on the lending side. Higher deposit pricing helped digital banks keep retail deposits flowing during tightening, but because lending rates did not rise more than at traditional banks, their margins were compressed and lending growth slowed relative to peers. Early evidence from the 2024-25 easing phase points to a partial reversal: digital banks cut rates on new deposits faster than traditional banks, particularly at longer maturities, which helped margins recover but reduced their earlier advantage in attracting household deposits. The post argues that stress testing and supervisory reviews should pay closer attention to the composition and stability of retail funding and to banks’ capacity to absorb margin pressure from rapid repricing. It also notes that the views expressed are those of the author and do not necessarily represent the European Central Bank or the Eurosystem.
European Central Bank 2026-05-06
European Central Bank blog post finds digital banks reprice deposits faster than peers while loan rates remain stickier
The European Central Bank has published research on how digital banks affect monetary policy transmission in the euro area, using supervisory data for over 170 institutions from 2016 to 2025. During the 2022-23 tightening phase, digital banks raised household deposit rates faster and by more than traditional banks, compressing margins and slowing lending growth. Early evidence from the 2024-25 easing phase shows faster cuts to new deposit rates that support margins but weaken their deposit-gathering advantage. The post argues that stress testing and supervisory reviews should focus more on retail funding composition and stability and banks’ capacity to absorb margin pressure from rapid repricing.