Digital sovereignty in core banking systems: Who controls the infrastructure?
Digital sovereignty has established itself as a key factor in IT strategy – and is therefore also relevant to core banking systems. In our series of interviews ahead of the launch of the new generation of BANCOS Core Banking, we discuss this topic with CEO Christian Binderbauer: Why digital sovereignty is becoming increasingly important for banks in the EU, what risks arise from a lack of sovereignty, and where a core banking provider can take specific action.
What role does digital sovereignty play in core banking systems?
Christian Binderbauer, CEO BANCOS AG: The importance of this issue is currently growing steadily for banks in the EU. One indicator of this is the trend discussed under the term ‘geopatriation’: the increased use of local or regional providers. It ranks among the most significant technology trends of 2026.
This is primarily driven by a combination of technological and geopolitical factors. Technologically, because banks must manage critical dependencies, including cloud operations and the use of artificial intelligence. Geopolitically, because the framework conditions for international technology partnerships have changed significantly.
What does a lack of digital sovereignty actually mean for a bank?
Firstly, risks arise in the form of significant dependencies: on individual providers, on their roadmaps, on their pricing, and in some cases also on the laws of their home countries. In the worst-case scenario, this leads to a loss of control over technology. This is currently being discussed under the term ‘kill switches’ – that is, the possibility that external access to cloud infrastructure or AI services could be restricted or shut down.
Added to this is a close link to regulatory compliance requirements. Where sovereignty is lacking, providing evidence to supervisory authorities and auditors becomes more complex – and, in some scenarios, impossible to manage properly. The potential consequences include restrictions on growth or increased costs due to the effort required to resolve regulatory findings.
In which areas of digital sovereignty can BANCOS provide particular support for core banking systems?
The first area is technological sovereignty – and for us, as a provider, this begins with ourselves. BANCOS AG, the company behind BANCOS Core Banking, is a European company with no capital participation from third countries. Our software is developed entirely within the EU. We therefore operate entirely within the European legal framework.
Our software is developed entirely within the EU. Additionally, we consistently minimise dependencies through open standards, an API-based architecture and the use of open-source components.
The second area of focus lies one level deeper with the individual technological components. Here, we consistently minimise dependencies through open standards, an API-based architecture and the use of open-source components. The bank is therefore not tied to proprietary interfaces and enjoys greater freedom of choice when it comes to infrastructure.
How does BANCOS ensure the data sovereignty of the user bank?
Primarily through the operating model. We provide banks with our software for use within their own cloud tenant. The crucial point here is the implication for us as a provider: no employee of BANCOS has access to a user bank’s data. This is not an organisational rule that can be followed or circumvented, but an inherent feature of the setup.
For us, this is precisely the key practical aspect of digital sovereignty in core banking systems: the bank retains control over its infrastructure, its interfaces and its data.
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