Source: in-cyprus.philenews.com
Cyprus has strengthened its banking system and restored confidence in its economy, but its ambition to become a European financial technology centre will depend on how effectively it attracts investment, develops specialist talent and adapts regulation to a rapidly changing industry.
That was a central theme of the first Forbes Cyprus Next Gen Banking & Fintech Summit, held on Tuesday at the Four Seasons Hotel in Limassol, where government officials, financial regulators, bankers and technology executives examined the country’s position in the evolving financial services market.
Organised by Phileleftheros Media Group in cooperation with Capital S.A., the summit brought together representatives of established financial institutions and emerging fintech businesses to discuss competition, digital payments, artificial intelligence and cybersecurity.
President Nikos Christodoulides opened the proceedings by presenting Cyprus’s economic stability as an advantage in attracting international businesses.
“We have demonstrated that Cyprus can offer stability even in the most challenging international circumstances,” he said.
The President pointed to economic growth of approximately 10% over three years, the recent upgrade of Cyprus’s sovereign credit rating by Standard & Poor’s and projections for public debt to fall to around 45% of GDP by the end of 2027.
He described Cyprus as a potential European gateway for financial innovation, noting that the wider technology sector already accounted for approximately 15% of GDP.
But he also called for greater banking competition, appropriate returns for depositors and improved access to finance, saying the stronger position of banks should benefit the wider economy.
Strong banks are only part of the equation
That distinction carried into the opening panel, where Central Bank Governor Christodoulos Patsalides said Cypriot banks were now considerably better equipped to withstand external shocks than during the 2013 financial crisis.
He cited improved capital ratios, liquidity and loan quality, while CySEC Chairman George Karatzias explained how targeted supervision and enforcement had helped strengthen regulatory credibility.
Invest Cyprus Chairman Evgenios Evgeniou identified a different obstacle facing businesses considering Cyprus.
“Regulation is not an impediment to growth and to competitiveness. What is an impediment to growth and competitiveness is uncertainty,” he said.
Deputy Minister of Research, Innovation and Digital Policy Nicodemos Damianou raised the related problem of bureaucracy. Putting government services online was not enough, he argued, unless the underlying procedures were simplified.
The discussion, moderated by Demetrios Zoppos of 33East, examined the challenge of combining rigorous supervision with the speed and responsiveness international investors expect.
The fintech challenge to traditional banks
In his keynote address, London Business School professor Costas Markides questioned the assumption that fintech companies would eventually displace established banks.
“The banks, the big banks, have really won that war,” he said, referring specifically to the first wave of fintech competition.
Digital challengers had transformed payments, foreign exchange and everyday transactions, but traditional banks had responded by adopting many of their innovations while retaining customers’ principal banking relationships.
Markides expected a hybrid financial system to emerge, with established banks operating alongside specialist fintech companies. He also identified Apple, Amazon and other technology platforms as potential threats to banks’ direct relationships with customers.
Artificial intelligence brought a further challenge.
Executives from Bank of Cyprus, Eurobank and UBS described how AI could help anticipate customer needs, personalise financial services and reduce administrative work.
Eurobank’s Andreas Assiotis argued that customers wanted financial solutions rather than products, while Bank of Cyprus Chief Digital Officer Demetris Nicolaou said technology could fundamentally change how banking processes were designed.
UBS Managing Director Laurent Rosfelder maintained that judgement, accountability and trust must remain human responsibilities.
University of Cyprus professor Constantine Dovrolis sounded a more cautious note, warning against allowing autonomous AI agents to act on financial decisions without adequate human oversight.
The discussion was moderated by Christophoros P. Anayiotos of KPMG.
Digital payments and cybersecurity
The third panel turned to digital assets and payments, where Kraken Cyprus chief executive Alexia Theodorou said clear regulation had influenced the company’s decision to establish its European base on the island.
Nuvei’s Laura Miller argued that technology must make transactions easier rather than introduce complexity, while Bank of Cyprus executive George Kousis called for stronger policy support and cooperation between banks and fintech providers.
Moderator Pieris Chourides presented preliminary research suggesting that Cyprus had nearly 200 fintech businesses, approximately 55% of them linked to payments.
The final discussion addressed what happens when technology fails.
XM’s Solon Houtris warned that outsourcing services did not transfer responsibility for cybersecurity risks. Odyssey Cybersecurity’s Nicholas Kattirtzis said financial institutions must demonstrate that critical services can continue during disruptions, while lawyer Andreas Michaelides emphasised directors’ responsibilities for security oversight before an incident occurs.
The panel, moderated by Ioannis Georgoulas, examined how the EU’s Digital Operational Resilience Act is changing expectations of financial institutions.
Cyprus’s next challenge
Closing the summit, master of ceremonies Elina Philippou, Senior Wealth Manager at Athlos Capital, returned to the question that had framed the event: “not whether Cyprus will take part in the rebuilding of financial services, but how it helps to shape it.”
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