The Bank of Spain is concerned about the progress that large technological corporations such as Google and Facebook can have within the financial sector. Although it is still not clear what role they will play, nor what will be adopted by the big fintechs, the regulator does believe that it is time to begin to put the beards to soak to avoid problems in the future.
Adapting strategies
The person in charge of sending the message has been the Deputy Governor of the Bank of Spain, Margarita Delgado, who has alerted financial institutions that it is necessary to “adapt their strategy and their business model” to ensure that in the medium and long term they can ” generate recurring results “.
All a warning to mariners at a time when the low interest rates and the low profitability of the financial business, make many entities consider what their future should be. There we have the case of BBVA, which is already considered a digital bank; or Santander, which on Wednesday will present its strategic plan based on the commitment to be an open platform of financial services.
Mergers
A redesign of the financial architecture as we know it today that should allow us to take advantage of what Delgado considers “new opportunities in terms of efficiency, new businesses and more dynamic ways of accessing clients”. And for the subgovernor banks have an inexhaustible source of resources in the data they have from their customers.
“It is vital that you optimize the use of the information” they possess so that it is useful in management and decision-making, says the deputy governor. Of course, remember that there is no single solution and that “in its design” you must apply an “appropriate” pricing policy that allows you to cover costs and associated risks, as well as “governance structures and management processes” that guarantee a effective risk management. Among them, by the way, “the cybersecurity, which has an almost immediate impact”.
Against this background, the subgovernor also calls on Spanish banks to put on the table a rigorous analysis of their profitability and their ability to face the future alone. “They are a clear alternative to improve profitability and gain efficiency,” he said. Therefore, it is likely that in the next few years we will see new concentration processes in Spain and, even, at a cross-border level as the “Banking Union” moves forward.
The reputation
But bigtech and profitability are not the only threats that banks have. Reputation is another of his weaknesses. So much so that the banking employers, AEB, has hired Thinking Heads, Eurocofin and Alto Analytics, as well as Román y Asociados to launch various initiatives that help them improve the image of the sector.
That is why the subgovernor claims a “cultural change” in the way in which entities relate to their customers. For it to be successful, it believes that the “commitment” of the governing bodies and their “implication” in the design and governance of the products marketed by the entity or the incentive mechanisms for sales personnel is necessary.