Interview

Digitalisation in banking continues apace. Payment transactions are no exception and, with the planned introduction of the digital euro, have the potential to fundamentally change the payment market in Europe. It would be the first digital means of payment in Europe to be issued by central banks in a similar way to cash.

Its introduction will restructure the future of payments in Europe and go hand in hand with the emergence of a digital financial ecosystem. This step is an important building block in strengthening European sovereignty in its monetary policy and promises greater independence and resilience. At the same time, it increases competition and promotes innovation in Europe. The European Central Bank is already preparing for the digital euro to be introduced in the near future, once it has been approved by the relevant EU bodies. Innovative technologies and customer-centric solutions will play an important role in supporting implementation and acceptance. In this interview, we take a look behind the scenes with renowned payment experts Christian Fink and Enrico Köhler. What opportunities does the digital euro offer? How can banks prepare for the change? What will the modern payment system of the future look like? Questions upon questions, and our experts have the answers.

Nehir: The digital euro marks a strategic turning point in European payments. It offers an opportunity to promote technological innovation, strengthen Europe's financial sovereignty and enhance market competitiveness. But what decisions need to be taken today to fully realise this potential in the coming years?

Christian: The digital euro is strategically crucial to securing Europe's monetary sovereignty in an increasingly digitalised world and reducing dependence on private, often non-European payment providers. It is intended to provide a government-backed, trustworthy and efficient digital means of payment for all citizens and businesses in the euro area, complementing cash and preserving financial stability. This digital euro is designed as an alternative for person-to-person (P2P) payments, at the point of sale (POS) and in e-commerce. This will lay the foundation for a more resilient and autonomous European payment ecosystem that will continue to function even in times of crisis and enable new areas of innovation in payments.

Enrico: Absolutely – Christian sums it up very well. For me, the strength of the digital euro lies in the fact that it transfers the trust we associate with cash to the digital world: reliability, security and independence – for everyone. This could give people who have been sceptical about digital payment methods access to them for the first time. Those who position themselves strategically today will be able to scale more quickly and in a more targeted manner tomorrow.

At the same time, new opportunities are emerging for European banks and payment service providers: they can build their own innovative services on this infrastructure – and thus strengthen their competitive position. So it's not just about technology, but also about digital self-determination. Ultimately, the digital euro is Europe's answer to the market power of global platform providers.

Christian: The legal framework established by the European Commission, the Parliament and the Council will provide decisive impetus in the coming years. The implementation of the digital euro requires a legal basis, with the relevant EU regulation expected to be adopted at the end of this year or early next year. Particularly important here are the upper limits for digital euros, so as not to jeopardise the financial stability of commercial banks, as well as the interfaces and technical architecture for integrating banks and payment service providers. Acceptance and user-friendliness among end consumers and merchants, which depend heavily on usability and the added value offered, will also be decisive factors in its success.

Enrico: Right – and I think we always have to see the digital euro in the context of other regulatory developments: PSD3, PSR, FIDA. These frameworks not only provide more clarity, but also bring urgently needed standards. For financial institutions, this is an enormous opportunity to reposition themselves. And one point is particularly important to me: data protection. People want to know that their data is secure. Options such as pseudonymised payments or offline functionality can be real anchors of trust here. If we think about this from the outset, it will not only increase acceptance – it will be a factor for success.

The digital euro is not just seen as another means of payment, but as a strategic infrastructure for European payments. Enrico emphasises the central importance of this perspective. Christian, you outlined the interaction with regulatory frameworks – this interaction not only presents challenges, but also new opportunities for banks and payment service providers. For example, innovative services could emerge, efficiency could be increased and greater independence from non-European providers could be achieved. At the same time, the introduction of the digital euro requires significant adjustments in technology, business models and regulatory compliance. What opportunities and challenges does this present for the European payments market? How can payment service providers position themselves in this market?

Enrico: The digital euro offers enormous opportunities for payment service providers. Programmable payments, smart wallets and digital identities in particular are opening up new business models. And one thing is clear: standard payment functions alone will hardly generate any revenue in the future. The decisive factor will be what develops around them – which services offer real added value and how customer problems can be solved intelligently. The challenge lies in adapting existing IT landscapes. This will require investment – but it is an investment in future viability and relevance.

It is crucial to position yourself clearly now. Financial service providers should ask themselves: What role do we want to play in the future ecosystem? Are we developing our own wallets? Are we seeking specific partnerships with IT service provider? Or should we focus on specific niches where we are particularly strong? Those who act early will not only gain a scaling advantage, but will also win the trust of customers more quickly. And that is precisely what will be the key to success in the competitive environment: transparency, data protection and a noticeable customer focus.

Christian: Enrico is right that the digital euro represents a fundamental infrastructure. Nevertheless, many financial institutions see it more as an additional expense than as a real opportunity. The real added value does not lie solely in payment processing, which will develop into a cost-neutral service. Rather, it opens up new perspectives in higher-level areas such as smart contracts, microtransactions and the creation of trustworthy digital identities. A radical rethink is essential: banks must move away from their traditional role as gatekeepers and become genuine problem solvers. Those who cling to traditional structures will run the risk of being relegated to mere custodians, while dynamic fintech players tap into value-adding areas. It is about actively breaking down silos and proactively shaping the future of digital ecosystems.

The digital euro could be more than just a means of payment – it has the potential to enable a new digital ecosystem. Enrico, you outlined this picture, with applications such as machine-to-machine payments and smart contracts opening up completely new use cases in payments. Christian, you talked about regulatory decisions that are making these developments possible in the first place. This will not only result in technological innovations, but also provide significant impetus for innovation across the entire payments market. These innovations can automate business processes, promote new business models and permanently change the role of banks and payment service providers. What kind of innovation can this bring to the payments market? How will this affect the banking market?

Christian: The digital euro can trigger significant innovation by creating a neutral, programmable infrastructure for new business models. It is no longer sufficient to consider the payment transaction itself; ancillary services that can be offered by a wallet or blockchain application must also be taken into account. This could facilitate the development of smart contracts for automated, conditional payments or drive forward the integration of identity management solutions in wallets, for example by linking them to a European digital identity (EUid). In this way, the digital euro not only promotes more efficient transactions, but also enables the emergence of more comprehensive digital services that build on the security and trustworthiness of digital central bank money and strengthen competition.

Enrico: For me, the digital euro is more than a means of payment – it is the door opener for a new generation of digital ecosystems. What previously sounded rather theoretical is suddenly becoming real: machines that initiate payments independently. Invoices that are automatically reconciled with payments. Smart contracts that fully automate processes. I find the topic of digital identity particularly exciting. Especially in the European context, with its high data protection standards, this offers a real competitive advantage. Less friction, more trust, new business models: this is exactly what the digital euro can enable.

Christian: For the banking market, the introduction of the digital euro presents a twofold challenge and opportunity. On the one hand, banks could lose part of their deposit business if customers hold the digital euro directly at the central bank. However, this is limited by planned holding limits. On the other hand, new business areas are opening up for banks as distributors and providers of value-added services related to the digital euro. For example, they could develop innovative wallet solutions that go beyond pure payment functions and enable new programmable money applications. This requires an adjustment of business models and investments in digital infrastructures, but has the potential to secure and increase the relevance of banks in digital payments.

Enrico: One thing is clear: this will be a strategic test for banks. They need to evolve – away from traditional account managers and towards providers of intelligent services for payments, identity and data. This requires more than just technology – it requires a willingness to change. I am convinced that banks have the necessary trust – but only those who fill this lead with real digital added value will remain relevant in the new world of payments.

The digital euro requires early action. You have emphasised that foresight and speed are crucial now. Financial service providers should prepare their infrastructure, actively monitor regulatory developments and examine possible business models so that they are not left behind when the digital euro is launched. How can financial service providers prepare for this? What decisions need to be made today?

Enrico: Anyone who waits now runs the risk of missing the boat. It is time to make clear decisions: Are we focusing on in-house developments or strategic partnerships? What skills do we need internally – technical, regulatory, communicative? In future, IT must be modular, API-enabled and flexible. At the same time, financial service providers should already be considering how they can implement regulatory requirements – from KYC to data protection – in a sustainable and efficient manner. And let's be honest: communication will be the decisive factor. Those who get their customers and employees on board at an early stage will build trust – and that can make all the difference in the end.

Christian: Enrico raises an important point, but many financial service providers are stuck in quarterly thinking and act like tankers instead of being agile. The digital euro is a disruption. They need to convert their IT architecture to an open, decentralised and interoperable basis – away from monolithic systems. That is a massive cultural change. Competition is coming from tech giants and agile fintechs that are waiting for programmable money flows. Communication is only credible if it is backed up by action. Customers want fundamental change and digital sovereignty, not just empty promises.

We have talked a lot about infrastructure, new business models and strategic opportunities. But ultimately, the success of the digital euro will depend on user acceptance – among private customers and businesses alike. How well does the digital euro fit their needs? And what needs to happen to make it convincing in everyday life?

Christian: For private customers, the digital euro will offer an additional, secure and privacy-friendly payment option comparable to cash in the digital space. It can meet the need for speed, cost efficiency and accessibility in digital payments, especially for online transactions and cross-border transfers. By being provided as a free basic instrument, it could also promote financial inclusion. However, acceptance will depend largely on how user-friendly the interfaces are designed and what added value they offer compared to existing means of payment.

For corporate customers, the digital euro offers considerable potential through the possibility of programmable money. Companies could use automated payment processes for supply chains or the execution of smart contracts, leading to efficiency gains and a reduction in transaction costs. For point-of-sale and e-commerce transactions, the digital euro could be a cost-effective and secure alternative to existing payment systems. The challenge here lies in the necessary integration into existing IT systems and the development of specific use cases that create clear added value for businesses.

Enrico: Christian has described the relevance of the digital euro for both private and corporate customers in a very nuanced way – the topic of programmable money in particular is a real game changer for companies. I would like to elaborate on this point: In the public debate – whether at the ECB or in the legislative process – the focus has often been on the consumer perspective. However, industry and business associations such as the BDI and the HDE are rightly calling for greater focus to be placed on business use.

This is precisely where the greatest potential for efficiency lies: automated invoice matching, machine-controlled payment processes along the supply chain and dynamic payment models in logistics are not a thing of the future – they can already be implemented today. The digital euro can be a catalyst for such applications.

The key now is to leverage this potential in concrete terms. This means developing economically viable, scalable use cases that actually help companies meet their operational challenges. Because one thing is clear: companies do not think in terms of means of payment, but in terms of process optimisation – and this is precisely where the digital euro can exert its greatest leverage.

The digital euro is setting a lot of things in motion – technically, procedurally and strategically. In your view, what are the most important differences compared to the current world of payments?

Enrico: The digital euro is much more than just another means of payment. It is the first public, European infrastructure that is fully API-based and programmable. This changes the rules of the game for everyone involved. Financial service providers can build on it and connect modules for offline payments, digital identities or automated processes. There are also significant regulatory developments: requirements such as AML and data protection are increasingly being integrated directly into the system architecture – in other words, implemented ‘by design.’

And last but not least, the market will open up. New providers will be able to scale more quickly, putting pressure on old market structures. For banks, this means that their role as the sole point of access to customers is a thing of the past. Relevance no longer comes automatically from size, but from innovation, trust and genuine customer proximity. Those who master this will also survive in the new payment ecosystem.

And when we talk about this new technological foundation, it is of course worth taking a closer look at the architecture itself – because it differs fundamentally from what we know today in payment transactions. Christian, what is your view – what makes the technical implementation of the digital euro so special?

Christian: A key technical feature of the digital euro is that it is not based on existing private payment infrastructures such as SWIFT, TIPS or EBA clearing. Instead, the system relies on its own dedicated architecture. At the heart of this new infrastructure is the Digital Euro Service Platform (DESP), which acts as a central communication hub. The DESP communicates directly via APIs (application programming interfaces) with the users' wallets, which are offered by banks or payment service providers. This enables direct and efficient data exchange and eliminates the need for a central settlement infrastructure or other intermediary networks.

Enrico: Exactly – this is a real break with the previous model. Direct exchange between wallets and the new infrastructure creates a kind of real-time payment layer that enables completely new business models. We are no longer just talking about payment processing – the infrastructure itself is becoming part of the digital value creation model. And that has consequences: banks need to rethink their back-end processes, rely more heavily on API communication and become more flexible overall. For me, it's clear that anyone who sees the digital euro as just an additional payment method is underestimating its strategic impact. It's not just changing how we pay – it's also changing who and why we pay.

To summarise, it is clear that the digital euro is not only changing technology and processes – it is also raising fundamental questions about the role of banks in the ecosystem. Christian, you put this very aptly in our preparation – could you summarise it again here?

Christian: And that is precisely where I see the core of the strategic challenge: if we take all of this seriously – new infrastructures, changed roles, direct access of the central bank to citizens – then the question naturally arises as to whether the digital euro could also pose an existential threat to the traditional payment business of banks.

Thank you both very much. I found this to be an exciting and honest exchange. We have seen that the digital euro will not simply be another means of payment. It will change the rules of the game – technically, regulatorily and strategically. Christian, your thesis sums it up perfectly: yes, there are risks for banks, but there are also enormous opportunities. And Enrico, you have shown how important it is to play an active role in shaping this development – not only from a technical perspective, but also in our communication with customers and partners.

I look forward to continuing this dialogue, because the road to the digital euro is definitely not a sprint, but a marathon. This makes it all the more important to set the right course now.