What Banks Need to Know About EBA’s 2025 Regulatory Focus Pt1: Implications for Balance Sheet Management

The European Banking Authority (EBA) is set to reshape the regulatory framework for banks across the European Union, as outlined in its 2025 Work Programme. 

Driven by a focus on harmonization, forward-looking risk management, and digital resilience, these changes will significantly impact integrated balance sheet management strategies.

From addressing liquidity and interest rate risks to ensuring regulatory compliance, the shifting regulatory environment calls for banks to adopt proactive measures that balance compliance with financial performance optimization. Below, we explore the EBA’s five key priorities for 2025 and their implications for advancing balance sheet management while offering practical strategies for banks to adapt and succeed.

1. Implementing a “Single Rule Book”

The EBA’s “Single Rule Book” initiative aims to harmonize regulatory frameworks across the EU, standardizing critical metrics like liquidity and Interest Rate Risk in the Banking Book (IRRBB).

For integrated balance sheet management, this translates to:

• Adapting to a unified reporting structure, simplifying cross-border operations while ensuring precision in compliance.
• Investing in scalable, cloud-native solutions to meet the demands of standardized regulatory requirements.
• Addressing transitional challenges, including the overhaul of legacy systems, to align with the new framework.

By streamlining compliance, the Single Rule Book offers opportunities to enhance operational efficiency while fostering a more predictable regulatory environment

2. Adopting a More “Forward-Looking” Approach

A cornerstone of the EBA’s 2025 agenda is a shift toward proactive, forward-looking risk management, focusing on emerging risks rather than solely relying on historical data

Key implications for banks include:

• Developing advanced forecasting models that integrate forward-looking risk indicators.
• Leveraging cloud-native balance sheet management solutions to enhance scenario analysis and risk forecasting.
• Strategically aligning balance sheet management practices with anticipated regulatory and economic developments.

This evolution encourages banks to move beyond reactive measures, leveraging future-focused tools to navigate risk effectively.

3. Data Infrastructure Improvements

Recognizing the pivotal role of data in regulatory reporting, the EBA is emphasizing robust data infrastructure as a foundation for transparency and compliance.

For integrated balance sheet management, this requires:

• Implementing cloud-native platforms to provide real-time data insights, enhancing decision-making in capital and liquidity management.
• Ensuring seamless integration of data for accurate, timely reporting.
• Preparing for audits and regulatory stress tests that demand unparalleled data quality and clarity.

Therefore, banks that invest in advanced data infrastructure will be better positioned to meet regulatory demands and drive operational efficiency.

4. Preparing for DORA (Digital Operational Resilience Act)

DORA’s implementation underscores the importance of resilient digital systems and robust IT risk management. The act aims to ensure operational stability while safeguarding against disruptions. 
The impact on balance sheet management includes:

• Incorporating IT risk scenarios into liquidity and capital planning frameworks.
• Allocating resources to bolster cloud-native infrastructures and fortify against cyber threats.
• Balancing compliance with operational resilience requirements while maintaining financial stability.

DORA represents an opportunity for banks to integrate digital resilience into their broader financial strategies.

5. Balancing AML Obligations with Innovation

As the EBA sharpens its focus on anti-money laundering (AML) compliance, it also emphasizes the integration of innovative financial technologies. This dual approach presents both challenges and opportunities.

Implications for banks include:

• Balancing the adoption of cutting-edge technologies with rigorous AML controls to meet compliance standards.
• Leveraging RegTech solutions that integrate with cloud-native balance sheet management platforms to enhance reporting accuracy and streamline AML processes.
• Proactively addressing the impact of fintech innovation on liquidity and overall balance sheet stability.

By aligning innovation with compliance, banks can unlock efficiencies while safeguarding against risks.

Conclusion

The EBA’s 2025 regulatory priorities mark a defining moment for the banking industry. By focusing on harmonization, forward-looking risk management, data infrastructure, digital resilience, and AML innovation, banks have the opportunity to transform compliance into a strategic advantage.

Adopting integrated, cloud-native balance sheet management solutions, such as Mirai RiskTech, will be critical in navigating these evolving mandates. These platforms enable streamlined compliance, advanced forecasting, and real-time insights, empowering banks to stay ahead in a complex environment.

The time to act is now. Banks that proactively embrace these changes and leverage SaaS balance sheet management platforms such as our flagship Mirai Platform, will not only meet regulatory requirements but also drive innovation and gain a competitive edge in the rapidly evolving financial landscape.