The European Commission has introduced a digital simplification package aimed at reducing regulatory complexity and improving data flows across the European Union. The package includes a digital omnibus that streamlines rules on artificial intelligence (AI), cybersecurity, and data, as well as a Data Union Strategy designed to increase access to high-quality data for AI development.
A key feature of the proposal is the introduction of European Business Wallets, which will provide a single digital identity for businesses operating in EU member states. This measure is expected to simplify administrative processes and facilitate cross-border business activities within the bloc.
The new regulations are particularly relevant for the banking sector, addressing challenges related to risk modeling, know-your-customer (KYC) and anti-money laundering (AML) compliance, and operational resilience. According to the proposal, implementation of rules governing high-risk AI models—such as those used in credit scoring—may be postponed by up to 16 months from August 2, 2026. These rules will only come into full effect once technical standards under the AI Act are established.
Additional changes include amendments to the AI Act that introduce an EU-level regulatory sandbox alongside national sandboxes. Real-world testing opportunities for high-risk AI systems will be expanded. The requirement for public registration of certain high-risk AI systems performing minor or narrowly defined tasks will be removed, with oversight centralized for general-purpose AI models.
Incident reporting requirements have also been streamlined through a single-entry point that consolidates obligations under various regulations such as DORA, NIS2, and GDPR. This aims to simplify crisis management during cybersecurity events.
For banks handling personal data breaches, proposed amendments extend the notification deadline to Data Protection Authorities from 72 hours to 96 hours. This change provides additional time for incident assessment before reporting requirements must be met.
Small Mid-Cap companies (SMCs) stand to benefit from administrative relief measures previously available only to small and medium-sized enterprises (SMEs). These include simplified technical documentation and extended exemptions from maintaining Records of Processing Activities under GDPR.
The consolidation of EU data rules is another major aspect of the package. Four existing legislative acts—including the Data Governance Act and Open Data Directive—will be merged into one under the Data Act framework. This aims to improve legal clarity while providing targeted exemptions related to cloud-switching rules.
The proposed European Business Wallet offers a harmonized digital identity solution intended for all legal entities in Europe. Banks could use this tool to automate KYC/AML procedures more efficiently—a move projected by policymakers to potentially save businesses up to €150 billion annually across the EU.
These legislative proposals are currently being reviewed by both the European Parliament and Council. In parallel, a Digital Fitness Check consultation has been launched by the Commission; it seeks feedback on how cumulative EU digital regulations impact stakeholders ahead of its closure on March 11, 2026.
Further details about these initiatives can be found in official documents provided by the Commission:
– [Press release](https://ec.europa.eu/commission/presscorner/detail/en/ip_24_6143)
– [Data Union strategy](https://digital-strategy.ec.europa.eu/en/policies/data-union-strategy)
– [Digital fitness check](https://digital-strategy.ec.europa.eu/en/library/digital-fitness-check)
