019: Breaking down banks’ tech budgets in 2026
Hello and welcome back to Speedtalks, podcast about everything tech in the financial services industry. We’ve had a bit of a break with our episodes, but we’re back, and today I’ll be discussing something that all banking and fintech leaders need to manage – budgets.
Where are European banks actually spending money in 2026? And… to understand where budgets are going this year, we’ll first look at what happened in 2025 – because last year forced banks into some of the biggest strategic and regulatory adjustments in a while.
Today, we’ll discuss what really shaped bank investments in 2025, and we’ll forecast where money will flow in 2026. Let’s dive in.
What 2025 looked like for European banks?
If I had to describe 2025 in one sentence, it would be:
Banks were preparing for change, but often without knowing exactly what the final rules would look like.
The entire year was dominated by regulatory preparation, AI scaling, payments transformation and continued digitalisation pressure.
Regulation uncertainty
European banks spent enormous budgets preparing for regulations that were either delayed, adjusted, or still evolving. The main ones?
DORA. Banks spent heavily preparing systems, vendors and risk frameworks ahead of DORA’s enforcement in early 2025. Many institutions had to re-map third-party dependencies, update incident reporting, and much much more. For many banks, DORA forced many investments at the beginning of last year.
Instant Payments Regulation. This was another massive driver of IT spend. Banks across Europe had to prepare to receive and send instant payments in euros, including compliance checks and fraud monitoring in real time. The challenge wasn’t just speed – it was fraud risk, system availability and customer expectations shifting towards 24/7 payments. And all of those need to be properly managed, thus – driving more costs.
The AI Act. Originally expected sooner, but the implementation timelines shifted, giving companies more time to comply. However… uncertainty meant banks had to prepare governance structures anyway. Or at least try to.
The wider regulatory backdrop
2025 was also the transition year where crypto firms and banks prepared licensing structures under MiCA. The Financial Data Access framework and PSD3 proposals also continued evolving. AMLA, the new European anti-money laundering authority, began shaping expectations around cross-border AML supervision. And EUDI wallet and eIDAS 2.0, which will redefine digital identity across Europe – but implementation timelines and adoption models were still under construction in many countries.
In short: Banks invested heavily in preparation, architecture and compliance readiness, even when final rules and dates were still moving.
Verification of Payee
Another big 2025 development was the expansion of Verification of Payee. Banks and payment providers had to implement systems verifying whether the beneficiary name matches the intended recipient before payments are sent. This is crucial in fighting authorised push payment fraud.
But implementation wasn’t trivial. It required system integration, data matching infrastructure and customer communication changes. And importantly – merchants and payment institutions also had to adapt.
Poland: KSeF
Here in Poland, from my Polish perspective, one major investment area was KSeF, the national e-invoicing system. Its rollout demanded enormous IT and finance involvement across enterprises and banks. Companies had to integrate systems, redesign accounting flows and adjust invoicing processes. IT vendors, ERP providers and financial institutions all felt the impact.
AI beyond experimentation
Next big thing? AI, you knew it was coming. 2025 marked the year when AI use cases moved beyond experimentation.
Banks began scaling:
- customer service automation
- fraud detection models
- internal document processing
- credit risk automation
- compliance monitoring
- and developer productivity tools
But this also created new risks. Institutions realised AI governance, explainability and operational control were just as important as innovation itself. You could see that AI budgets shifted – from innovation teams to core infrastructure.
Payments
Another big spent category was instant payments. They continued to grow, but fraud grew with them. So banks faced two pressures simultaneously: customers expect money to move instantly, meanwhile fraudsters exploit instant movement.
So banks had to invest in real-time fraud analytics, behavioural monitoring and transaction intelligence. Payments moved from being back-office to – I believe I can name it – strategic infrastructure.
Open banking
Of course, open banking infrastructure is now widely implemented across Europe. But business monetisation still lags. APIs exist. Connectivity exists. Yet we see that many banks still struggle to build profitable business models around open data. The promise is real – but in my opinion commercial execution is still not where it could be.
Green finance
Last but not least – green finance. Sustainability reporting and ESG requirements continue driving compliance costs. However, compared to AI and payments, green finance investment is present – especially in banks’ business plans for next years – but definitely less visible in technology budgets.
Where are banks putting money in 2026?
SO now that we have the last year’s spending summarized – let’s move to the big question. Where are banks putting money in 2026? From our perspective as a software partner for banks and fintechs, several trends are becoming clear.
AI – but more pragmatic
AI. Of course it’s AI. It will absolutely remain on bank investment agendas in 2026. But the mood has shifted. What I see is that the era of “we must do AI quickly or we’ll fall behind” is largely over. Budgets were approved rapidly, pilots started everywhere, and expectations were sky-high.
Banks have learned several hard lessons over the last few years: AI is not always faster. AI is not always cheaper. And AI absolutely does not remove complexity – it often adds more.
In 2026, in my opinion, spending will focus on agentic AI, human-in-the-loop automation, and highly specific, well-scoped use cases.
Machine-to-machine commerce
There’s also this topic of: “How do we prepare banking, payments, and e-commerce systems to support purchases made by AI agents?” – we see it more and more.
Imagine your AI assistant booking travel, renewing insurance, or ordering household supplies automatically. Who authenticates? Who authorises payments? Who takes liability? How do we prevent fraud? Banks should slowly prepare their systems for machine-to-machine commerce, not just human transactions.
Sooo… AI spending will continue, but cautiously – rather than being hype driven.
Payments – more invisible, more critical
Next category – payments. In fact, payments are becoming more invisible – and that’s exactly why banks must invest more. Consumers increasingly expect instant transfers. Businesses expect immediate settlement. And regulators are pushing hard for instant payments availability. This creates two simultaneous pressures:
- banks must be technologically ready,
- and they must be regulatorily ready.
Systems must operate 24/7. Processing must be real-time. Fraud detection must work instantly. Infrastructure resilience becomes critical. On the regulatory side: compliance with European instant payment regulations requires upgrades, reporting adjustments, fraud monitoring improvements, and new operational processes.
Payments also continue evolving through:
- account-to-account payments,
- mobile wallet integration,
- QR-based payments,
- and seamless checkout experiences.
Embedded Finance 2.0
Now, the 3rd category on my list – let’s call it Embedded Finance 2.0.
Let’s look at Poland as an example and the Polish market with partnerships such as PKO and Allegro’s payment solutions compared to mBank and its collaboration models with e-commerce players like Morele.
Different strategies are emerging. Some banks build deep exclusive partnerships. Others enable flexible multi-platform integrations. Some platforms create their own financial ecosystems.
Embedded finance is no longer about “adding finance to a customer journey”. We see this trend – banks increasingly understand that financial services must appear where customers already are.
And with that customisation and personalisation comes more costs on things like API development, partnership platforms, merchant integrations, etc.
Open Banking moving toward Open Finance
Now that we’ve discussed those 3 categories, let’s move onto the next one: Open Banking moving toward Open Finance.
Open Banking promised a transformation. In reality, adoption has been slower than expected. Yes, APIs exist. Yes, data access frameworks operate. Yes, fintechs use them. But from a pure business perspective, monetisation can be seen as rather disappointing.
What I see is that the industry still struggles to translate this regulatory infrastructure into commercial success. And this remains an unresolved opportunity – maybe one banks could focus on in 2026.
Digital identity: EUDI Wallet
Another one of the most impactful changes coming is digital identity. The European Digital Identity Wallet, or EUDI Wallet, aims to give citizens a secure way to store and share identity credentials digitally, and this will strongly affect banking. Why? Because identity verification is central to onboarding, KYC, AML, and compliance processes.
In 2026, banks will invest heavily in adapting onboarding journeys to work with digital identity solutions. This means: faster customer onboarding, simplified identity verification, reduced document friction, improved user experience. But it also requires: system integration, regulatory compliance adjustments, process redesign, and cybersecurity reinforcement.
User experience will change significantly. Opening a bank account or applying for services may become much faster. But banks must prepare for it both technologically and operationally.
Trust services and eIDAS readiness
On that note – closely related is the evolution of the eIDAS regulation, which governs electronic identification and trust services across Europe. As digital signatures, electronic seals, and trusted digital interactions expand, banks must update their systems, standardise trust services, and re-think authentication.
This, of course, means more spending, which – while painful – can actually enable scale across Europe. More contracts will be signed digitally. More processes become remote. And banks must ensure these interactions are secure and compliant.
Cybersecurity
Now, if there is one area where budgets will not shrink, it is cybersecurity. Cyber threats continue to grow – fraud attacks increasingly use AI. Deepfake scams. Social engineering attacks are becoming more convincing. And banks are prime targets.
Spending will focus on behavioural fraud detection, identity-based security, real-time monitoring, and incident response automation. And regardless of economic conditions, we expect continued investment in that category.
The final tension: innovation vs regulation in Europe
And finally, last but not least – the big question. Can Europe keep up with innovation?
European banks operate in one of the most regulated environments in the world. European regulation protects consumers and ensures stability, which is important. But regulation also slows implementation. Banks often operate in an environment where innovation speed is limited by compliance. Meanwhile, competitors in other regions move faster.
The tension between innovation and regulation will not disappear. The banks that succeed will be those that:
- build compliance into architecture,
- treat regulation as a design constraint, not an afterthought,
- invest early, not reactively.
Where European banks will spend in 2026
So, where will European banks spend money in 2026? Not everywhere. But specifically in:
- pragmatic AI and automation,
- real-time payments,
- embedded finance partnerships,
- open finance infrastructure,
- digital identity adoption,
- trust services and eIDAS readiness,
- cybersecurity,
- and regulatory compliance.
And the biggest shift compared to recent years? Less hype. More caution and calculation. The institutions that succeed will not be those chasing every trend, but those choosing carefully where technology truly improves their operations.
Outro
And on that note – thank you for listening today. If you found this episode useful and want to learn more about those trends – we’ve compiled everything into our Banking Trends 2025–2030 report – real insights, real examples, and a clear view of where banking is actually heading. The link is in the description.
And as always, I’ll see you in the next episode.
