Cyprus' banking ecosystem is undergoing a period of significant change, as technology transforms the way banks, businesses, and consumers transact and manage their financial activities.
When we say or hear about banking ecosystem, the term encompasses the entire environment related to banks and financial services in Cyprus. For example, this category includes banks, the Central Bank, financial organizations, payment and fintech companies, supervisory bodies, customers, businesses and investors.
The digitization of banking services, artificial intelligence, Open Banking, new payment solutions, cybersecurity and the utilization of data are now key axes of the financial sector's strategy.
At the same time, the growth of FinTech companies and the entry of new technological players create a more complex and competitive environment. The banking experience is increasingly moving from the branch to digital platforms. The ability to carry out transactions, payments and other banking operations, through mobile phones and online applications, has now become an integral part of everyday life.
What is Open Banking?
To make it easier to understand, let's explain what Open Banking is. It is a model in which the customer can, with their consent, allow third-party licensed companies – e.g. fintechs – to access certain banking data or make payments through their bank account.
This essentially enables the customer to share, with his consent, his banking data and use the services of different providers through a single digital environment.
The most important element is that control remains with the customer. Access to data is not uncontrolled, but is based on user consent and a regulatory framework governing licensed payment service providers.
In Cyprus, the provision of payment services is governed by the legislation that incorporated the European PSD2 Directive, while the Central Bank of Cyprus has a central role in the licensing and supervision of the relevant institutions. Open Banking thus creates conditions for more innovation, but also for a financial sector in which the bank is no longer the only hub for the provision of services.
A new era
The direction given by both the Central Bank of Cyprus and the European Central Bank (ECB) with regular analyses is that digitalization is no longer an option, but a necessary condition for maintaining the competitiveness of banks.
Investments in technology can improve productivity, reduce operational costs in the long term and upgrade the customer experience, but at the same time they create new challenges in terms of cybersecurity, data management and operational resilience.
For supervisors, therefore, it is not just a matter of faster adoption of technology, but of a digital transformation based on strong governance, appropriate investments and effective management of new risks
For banks, digitalization is not just about customer convenience. It is also associated with automating processes, reducing operational costs, faster service, and creating new products.
What is certain is that artificial intelligence is expected to be one of the most important factors that will shape the next day of the financial industry. Its applications can extend from automated customer service and data analysis to identifying suspicious transactions, preventing fraud, and better assessing risks. However, leveraging AI also comes with new requirements. Data quality, protection of personal information, transparency of algorithms and regulatory compliance are critical prerequisites.
The development of FinTech creates new possibilities but also new forms of competition. Technology companies and specialized financial service providers offer solutions that span from payments and money transfers to financial data management.
The European Central Bank points out that digitalisation is already changing banks' business models and enhancing competition from purely digital banks and new providers. The development of these models can provide more choice for consumers and push traditional banks to improve their services. At the same time, however, it poses new challenges to profitability, financial stability and the management of technological risks.
Payments are instant
Modern payment solutions are another key pillar of the transition. Digital wallets, contactless transactions, e-commerce and instant payments are gradually changing consumer habits. For citizens, speed and convenience are becoming increasingly important. For businesses, this development creates a need for secure, fast and easy-to-use payment infrastructures, while at the same time strengthening competition between traditional and new providers.
Instant payments are a prime example of change. In the European Union, the relevant regulatory framework provides that money transfers can be made in a few seconds, 24 hours a day and all days of the year.
For banks in Cyprus, the obligation to receive instant payments applied from 9 January 2025 and the obligation to send from 9 October 2025. Instant payment services must also be offered through the same channels used for traditional money transfers. This development changes customer expectations. The bank transaction ceases to be linked to working hours and waiting time. Immediacy is gradually becoming the new standard.
Cybersecurity: the other side of digitalisation
As dependence on digital infrastructure increases, so do the risks. Cybersecurity is now at the core of the operation of financial institutions. Banks and companies in the ecosystem are called upon to continuously invest in the protection of systems, data and transactions, but also in informing users about the risks of online fraud.
In its Financial Stability Report, the Central Bank states that, in 2025, cybersecurity risks remained elevated and continued to be a material source of financial stability concern. Cyber threats are now multidimensional and have an increased potential impact, and their impact can go beyond the level of the individual institution, affecting the wider financial system through operational and financial channels, as well as through a breakdown of trust in the system.
The more unfavourable geopolitical environment further reinforces the importance of cybersecurity risks. The rise in geopolitical tension and international fragmentation has strengthened the role of cyberattacks as a means of hybrid threats, especially when they target critical infrastructure, such as telecommunications, energy, and the financial sector.
The report refers, during the period 2025-2026, coordinated DDoS (Distributed Denial of Service) attacks in Cyprus, targeted, among others, banking institutions and critical digital infrastructure, causing temporary disruptions to the availability of services.
At the same time, the increasing digitalization of the financial sector makes cybersecurity a critical factor in maintaining business continuity, especially in light of the increasing frequency and complexity of cyberattacks in a burdened geopolitical environment.
Cybersecurity risks, it is indicated, are further amplified by recent developments in artificial intelligence, in particular through the development of advanced frontier AI models (FAIM), which can accelerate the detection and exploitation of software vulnerabilities.
The Forbes Cyprus conference
In this new reality, the Forbes Cyprus Next Generation Banking & Fintech Summit – the first Forbes Cyprus conference, published by Fileleftheros Group – which will take place on October 13 at the Four Seasons Hotel, in Limassol, comes to pose an ambitious but absolutely timely question: Can Cyprus become more than a market that adopts developments and evolve into a regional hub where these developments are created, tested and developed?
The first Forbes Cyprus conference on banking and fintech does not aspire to give easy answers. It aspires to open the debate on the right basis.
The participation and intervention of the President of the Republic Nikos Christodoulides in the conference gives special importance to a discussion that concerns not only the financial sector, but the wider development prospects of the country.
Distinguished Professor Costas Markides, of London Business School, as the keynote speaker of the conference, will analyze the international perspective on entrepreneurship, innovation and the creation of a competitive advantage, which is necessary for a small economy that seeks to play an upgraded role.
