Trade Treasury Payments (TTP) spoke with Brigadier Robbie Boyd (Retired), a member of the senior leadership team at the Defence Security and Resilience Bank (DSRB) Development Group, about the scale of Europe’s defence financing challenge and what needs to change for banks to engage more confidently with defence supply chains.

Boyd argued that current levels of European defence spending fall well short of what is required to meet NATO’s deterrence objectives. While Europe spends roughly €350 billion a year on defence, he noted that recent analysis from think tanks and consultancies suggests the true figure needed could run into the trillions. “If Europe is seriously going to contribute what it needs to, because it’s been riding on the back of the US for some time, the numbers are far higher than what we are spending today,” he said.

At the same time, Boyd believes there is significant untapped potential in the commercial banking sector. Banks, he explained, have largely stayed away from defence financing for decades, not only because of ESG and compliance considerations, but also because of a lack of familiarity with the sector itself. “They haven’t done it for 40 years, so they don’t quite know where to invest,” he said.

To unlock that capital, Boyd pointed to three key enablers. The first is the use of guarantees. Centralised, institutional guarantees could materially reduce risk for commercial banks and help incentivise them to invest in defence-related supply chains without fear of losses. The second is a more deliberate focus on dual-use technologies (those that have both military and civilian applications). These investments, Boyd argued, are often easier for banks and investors to support and can be particularly valuable for start-ups and scale-ups operating at the edge of defence and commercial innovation.

The third is reframing defence as a source of long-term, commercially attractive investment. Boyd points to examples where military-driven innovation, such as advances in data storage or biosynthetic technologies, could have transformative civilian applications while also meeting critical defence needs. “These are good investments if you can target commercial banks onto the right things,” he said.

Central to this ecosystem, Boyd explained, is the Defence Security and Resilience Bank itself. He described the DSRB as a treaty-based, multinational lending institution, comparable in concept to a “World Bank for defence”. Owned by its member states and capitalised by them, the institution is designed to provide three core services: long-term, low-cost lending to governments for defence capability; direct financing support for nationally critical defence projects; and guarantees that enable commercial banks and investors to participate more actively in defence and innovation supply chains.

By providing AAA-rated guarantees and loans over extended time horizons, Boyd believes the DSRB could release tens of billions of euros from the private sector into defence, while also easing the political pressure on governments to divert funding from areas such as healthcare or welfare. “This is about working together across economic and military power to deter the threats we’re facing today,” he said.

For Boyd, the significance of the initiative lies not just in its financial mechanics, but in its timing. With geopolitical risks intensifying and defence inflation rising, he sees the DSRB as a pragmatic attempt to modernise how defence is funded, using proven financial tools rather than purely military innovation. As he put it, “The best piece of innovation in defence over the last 40 years may well be coming from the finance industry.”