AFM and DNB warn of systemic risks in the financial sector from digital dependence
The Dutch financial sector faces increasing systemic risks stemming from its growing reliance on a limited number of non-European IT service providers. This is the key message of a joint report published today by the Dutch Authority for the Financial Markets (AFM) and De Nederlandsche Bank (DNB). The regulators caution that this dependency amplifies the risk of concentration and systemic disruption, where a failure at a single provider could impact large segments of the financial sector. With this publication, the AFM and DNB aim to encourage financial institutions to strengthen their digital resilience. They also underscore the strategic importance of progressing toward European digital autonomy.
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The report highlights that financial institutions in the Netherlands are increasingly outsourcing critical IT functions, including cloud services, software solutions, and AI models, to non-European IT providers. This trend has accelerated in recent years, making the sector more vulnerable to disruptions. According to the regulators, recent geopolitical developments have intensified the urgency of addressing digital dependency.
Widespread reliance on the same providers and infrastructures has led to concentration and systemic risks. Failures or cyber incidents at IT service providers can affect multiple institutions simultaneously, meaning the stability of the financial system is partly dependent on the resilience of external vendors.
Heightened geopolitical tensions
Against the backdrop of heightened geopolitical tensions, there is a risk that state actors could exploit these digital dependencies for political leverage or weaponise them in trade disputes. The report outlines scenarios such as the sudden suspension of essential IT services due to sanctions, or a hybrid attack combining cyber intrusions and sabotage of infrastructure, which could severely disrupt critical and vital processes. While the report acknowledges that financial institutions are aware of these risks, it stresses that further action is needed.
Steven Maijoor, Chair of Supervision at DNB: "Without European digital alternatives, the sector remains exposed to geopolitical risks."
Laura van Geest, chair of the Executive Board of the AFM: "Digital dependence makes our financial sector vulnerable. We can only enhance resilience sustainably through European cooperation and greater strategic autonomy."
Preparing for disruptive scenarios
Digital dependence is a complex issue that cannot be resolved overnight. The AFM and DNB urge institutions to prepare for disruptive scenarios by collaborating with IT vendors, authorities, and peers. This includes developing threat scenarios, sharing intelligence on actual incidents, and conducting chain tests throughout the ecosystem. In addition, it is essential that they can clearly articulate and justify how their decisions support data sovereignty and security.
Towards long-term strategic autonomy
Reducing digital dependence is a long-term challenge that transcends individual institutions and sectors. It requires coordinated European solutions. The report calls for the development of robust European alternatives to non-EU IT providers and emphasises the need to foster a strong innovation and investment climate for European technology companies.
More information
For more information, journalists can contact Dorinde Meuzelaar via d.c.meuzelaar@dnb.nl or 06-51963073.
An English version of this report will be available soon.
Digitale afhankelijkheid in de financiële sector (Dutch only)