European Banking Authority Warns That ‘De-Risking’ Is a Growing Problem for Consumers

The European Banking Authority (EBA) has identified ‘de-risking,’ also referred to as ‘debanking,’ as a significant issue for consumers across the European Union. According to the organization’s 9th biennial Consumer Trends Report for 2024/25, the three most pressing consumer concerns within the bloc are fraud, rising levels of indebtedness, and de-risking.

“Unwarranted de-risking is the third most relevant issue,” the report stated. It highlighted that “more consumers [are] facing increased difficulties in opening and retaining payment accounts.” The EBA emphasized the critical nature of access to banking services, noting that “access to [these] is a prerequisite for residents in the EU to be able to participate in the EU economy.”

De-risking, or debanking, occurs when financial institutions refuse to open or decide to close accounts for customers. The EBA warned that this trend disproportionately affects “vulnerable consumers,” including “migrants, refugees, the homeless, and individuals with poor financial histories.”

Concerns over debanking have extended beyond the EU, with similar issues arising in both the UK and the United States. High-profile figures, including former U.S. President Donald Trump, have claimed that banks refuse services to individuals based on political views, particularly those with conservative leanings. However, banks have consistently denied these allegations.

The EBA’s report also drew attention to the growing threat of fraud, particularly in the digital space, where criminals are increasingly exploiting technological advancements. “The report concludes that payment fraud is still the most significant issue for EU consumers,” the EBA stated.

It further highlighted the rise of new fraudulent techniques, particularly those relying on social engineering. “This also reflects the emergence of new types of fraud, such as social engineering techniques. In this type of scams, payers are manipulated into making a payment to the fraudsters, who have adapted their techniques to elude the application of the strong customer authentication requirements imposed by EU law.”

Another pressing issue identified in the report is the increasing levels of consumer indebtedness across the EU. The EBA pointed to the growing popularity of “Buy-Now-Pay-Later” schemes and other short-term credit products as contributing factors. The organization noted that inadequate credit assessments and a lack of transparency from lenders are exacerbating the problem.

In light of these findings, the EBA has indicated that it will take further measures to address these issues in the coming years. “The EBA will consider which actions to take in 2025/26 to address the topical issues identified in 2024/25 and with the aim of further enhancing consumer protection across the EU,” the organization stated.

By fLEXI tEAM