Filenews 30 November 2025 - by Theano Thiopoulou
There is no end to the challenges that banks, customers and employees face and will face in 2026. Enhancing their competitiveness and sustainability goes hand in hand with investing in technology, offering personalized customer service, enhancing cybersecurity, and finding new sources of revenue.
Banks are setting up their 2026 business plans with a focus on revenue and credit growth and will fully incorporate the benefits of acquisitions and mergers they have made, whether they are credit institutions or insurance organizations.
The positive news for customers ahead of 2026 is summarized in two sections: interest rates and technology. With ECB interest rates in a phase of de-escalation, bank customers expect that from the new year they will be more favoured both for new borrowing and for reducing the pricing of older loans.
The year started this year with an ECB base rate of 3%, but from the beginning of February and until June, the interest rate had fallen to 2%, an important breath of fresh air for borrowers for both existing and those who wanted to borrow.
This year, the ECB cut interest rates by a total of 100 basis points (1%) with four cuts from 0.25% completed early until April. This was preceded by four other rate cuts in 2024 that reduced the lending rate by a total of 100 basis points, with the result that interest rates are now 50% below their peak level in September 2023 when they were at 4%.
As for what will happen at the last meeting of the ECB's governing council on December 17, both the leadership of the European Central Bank and central bankers with their public positions are trying to disappoint expectations for a last interest rate cut at the end of 2025.
Essentially, from 2026 the ECB is expected to follow a "wait and see" policy but also not to make a reduction immediately, at least with the current situation there does not seem to be an increase.
Instant payments
That is one part. There is the second, equally important, practical and inexpensive. The sector is preparing to further exploit the possibilities offered by the European regulation of Instant Payments, which will mark a new era of speed, security and flexibility in everyday transactions, both between natural and legal persons and inter-banking, in real time.
Although the issue was originally to close in 2025 with a slight delay, its implementation goes to 2026. But what does this mean in practice? In the coming months, instant payments will become even easier. In addition to money transfers that someone registers as today, based on the IBAN and the name of the beneficiary, in the coming months this money transfer will only be made by phone number. In practice, just as a Bank of Cyprus user transfers an amount to another Bank of Cyprus user through the so-called "QuickPay", or a Eurobank user to another Eurobank user through the so-called "ContactPay", this will be done between customers of different banks.
The question is how it will be done and it is not yet clear. One version is through a single platform, as is done in Greece, "Iris", or each bank will use its own "app". What is certain, however, is that it will take a few more months to complete this venture, which promises simple and fast transactions for the benefit of their customers using only the phone of the traders.
Changes for customers and employees
In the last decade, the banking sector in Cyprus and internationally has been transformed like never before in the history of credit institutions. New technologies, digital platforms, changes in the way we trade and increasing demands for specialized skills have created a completely different work environment.
From the times when most positions were for stores and cash registers, we have now reached a new reality where specialties such as data analysts, digital marketers, risk modelers, cyber security experts dominate. This picture is directly related to bank customers, who have changed the way they transact and in a few months will come greater familiarity with artificial intelligence.
Banks continue to systematically invest in digital transformation, offering new products and services that meet today's needs and with an emphasis on the needs of younger generations who have different "wants" compared to older ones. Emphasis is also placed on electronic processes, digital transactions and the industry is adopting solutions that upgrade the customer experience and enhance efficiency.
2026 is set to be a year of stability and positive prospects for the banking sector in Cyprus. The economy continues to grow dynamically, public finances remain sound, unemployment is at an all-time low and the path of interest rates is stabilising as a result of broader monetary policy. This environment strengthens market confidence and lays the foundations for strengthening lending and maintaining stability in the financial system. Confirmation of the positive course are the very recent upgrades of the Bank of Cyprus and Eurobank by the rating agency Fitch Ratings.
A ringing bell for banks
At a time when bank employees and customers know first-hand what a technological revolution means and how the transactions of the future will be carried out, the supervisory authorities are asking for readiness from banks.
Eurozone banks must prepare for unprecedented crises that will cause severe disruptions, with far-reaching consequences for financial systems, the European Central Bank warned as part of its supervisory priorities for 2026-2028 announced last week. The focus, according to the ECB, is on geopolitical risks and, in this context, it plans to conduct a reverse stress test in 2026, where virtually every bank will have to think about geopolitical risk scenarios that could cause a significant blow to its capital adequacy.
The ECB has long argued that banks are facing a new reality, with more frequent shocks, from tariffs to cyberattacks, requiring them to be prepared for a range of possibilities without knowing the exact nature of the next crisis. This requires sound capital buffers, modern technological infrastructure, proactive management that is aligned with economic reality, and more intrusive supervision.
Challenges for the Association of Banks
In the field of the current field of the ESG triptych (environmental, social and governance strategies), the expansion of the interbank assessment project continues through Artemis Credit Bureau, a subsidiary of the Bank Association, contributing to transparency and responsible financing, which pushes the entire ecosystem of Cyprus companies to adopt more sustainable options.
In addition, for the Hellenic Bank Association, the year is expected to be particularly active. With the assumption of duties by the new General Manager at the beginning of the year and the organization, in May, of the meeting of the Board of Directors and the Executive Committee of the European Banking Federation in Cyprus, the role of the Association is further strengthened.
At the same time, as reported by the Association of Cyprus Banks, the pre-election period foreshadows intense political debates around the banking system, services and the way of serving citizens and businesses, in which the Association is once again at the center of the dialogue.
