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Digital Economics 25 Jan 2017

The digital transformation brings opportunities, BBVA tells the G20

BBVA is the only financial institution attending the G20 conference being held this Wednesday in Wiesbaden (Germany).  Executive Director José Manuel González-Páramo participated in a conference on the opportunities and risks associated with the digital transformation, together with the President of the Deutsche Bundesbank, Jens Weidmann; German Finance Minister Wolfgang Schäuble; Governor of the Central Bank of Mexico, Agustín Carstens; and Bank of England Governor Mark Carney.

Before an audience of the G20 member states, guest countries, international organizations and central banks, José Manuel González-Páramo defended that the digital transformation underway in the banking sector is creating opportunities and facilitating and accelerating financial inclusion in less developed countries. The client is, undoubtly, who benefits the most with it. To do so, he explained BBVA’s firsthand experience as “one of the banks more committed to financial inclusion strategies”, especially in Latin America, where we have at the moment close to 10 million clients benefited from financial inclusion initiatives.

González-Páramo participated in the Digitising Finance, Financial Inclusion and Financial Literacy conference, organized by the German Finance Ministry and Bundesbank in Wiesbaden (Germany), as part of the German presidency of the G20. This conference will serve as a foundation for future debate on the digital transformation – one of the G20’s priorities this year.

BBVA’s Executive Director described the transformation process to more than 180 G20 delegates, including political leaders and representatives of financial institutions and fintech firms.  He explained how it has profoundly altered society and the economy due to the rapid adoption of digital technologies. In this new digital era, consumers have more power than ever before, he noted.

Digitalization and financial inclusion

José Manuel González-Páramo explored the impact the digital transformation is having on groups with difficulty accessing bank services. On the demand side, technology helps people access banks through the use of mobile devices, for example, he recalled. High mobile penetration in emerging economies has the potential to help overcome structural barriers to financial inclusion, such as geographic distance and bureaucratic processes, improving efficiency. On the supply side, he added that the digital transformation lowers costs for financial institutions.

Potential benefits of P2P lending

José Manuel González-Páramo then explained that the new technologies, such as online lending platforms, have been booming and new fintech actors are now part of the value chain that the banking sector traditionally controlled. One of the segments where fintech firms are standing out the most is in granting loans to SMEs as an alternative source of financing.

BBVA’s Executive Director underscored that even though this non-bank finance can be a useful tool to help provide credit in the system, it is important to ensure the right conditions exist for a competitive environment. This means that similar products and service should be subjected to the same harmonized regulations in the different countries and that supervisors must ensure that consumers are always protected.

The Governor of the Central Bank of Mexico thanked the G20 for including financial inclusion in its agenda.  Agustín Carstens assured that central banks can play an important role as catalysts of financial inclusion.  He also referred to Mexico as a good example of a market with a seamless, 24×7, real-time payment system, which welcomes new entrants.  He also pointed out that Mexico’s success in expediting access to financial services among a greater part of its population, depends to a great extent on its ability to offer access to technology and the Internet to everyone.

Photo of BBVA Executive Director José Manuel González-Páramo at the G20 Conference

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