This crisis has revealed the need for banks to fully embrace the latest technology – or risk going extinct.

These are not our words, but those of Pentti Hakkarainen, Member of the Supervisory Board of the ECB.

Just as the EU Commission did a month ago, the ECB uses this blog post to stress that COVID-19 has laid bare the need for a fully digital, financially and operationally resilient, and competitive banking sector able to support the economy and individual consumers.

Incumbent banks recognise this, and have been working on ambitious digitisation plans for a number of years. Except that, according to Mr Hakkarainen, the banks have not always matched the ambition of their plans with equally ambitious innovation budgets, resources, training, skills, and commitment to execution.

His remarks do resonate with what we have seen in the market over the past several years – some notable exceptions aside. For example, in relation to a lack of compelling Open Banking products and services, or stubbornly user-unfriendly on-boarding processes and customer journeys. Until recently, scale and customer inertia had afforded incumbent banks a degree of protection from competition and disruption. In January 2020, this complacency was already critical, but with COVID-19 having forced an overnight change in consumer behaviours and needs, it may become terminal.

In Ernest Hemingway’s novel “The sun also rises” a character is asked “How did you go bankrupt?”.  “Two ways.", he replies, "Gradually and then suddenly.”

Incumbent banks may do well to heed this latest call from the ECB to embrace technological innovation wholeheartedly, if they want to avoid having to confront this answer to similar questions - not about bankruptcy perhaps, but about their decline - in a few years down the line.