Customer experience, the new business models and investment in social commitment are the three opportunities for the banking industry, as it seeks to maintain a relevant role in society. “Investing in social sustainability is part of the banking industry's responsibility,” said José Manuel González-Páramo, BBVA’s Executive Director and Head of Economy, Regulation and Institutional Relations, during the event entitled XIII Banking Industry Meeting organized by IESE (13th Meeting of the Banking Sector, organized by IESE) in Madrid.
José Manuel González-Páramo began his speech with a review of the new context of the financial sector, which has been shaped by three factors: the massive adoption of digital technologies and the enormous amount of data being processed; the arrival of new generations - the millennials and the centennials; and the competition from new actors, whether they be large digital companies or startups.
In this context, he says, there are two possible scenarios: on the one hand, the inertial scenario, in which the banking industry becomes a simple provider of infrastructure, “the cables of the system,” a mere platform in which “ it loses contact with the customer,” and is displaced towards businesses areas that are not very profitable. In the second scenario, we find banks that are highly competitive, with competitive prices and automated processes. These institutions would be focused on caring for their principal asset: the customer as the center of the business model, and they would be dedicated to offering advice as a differentiating advantage.
José Manuel González-Páramo, BBVA's Executive Member of the Board, Head of Global Economics, Regulation and Public Affairs, during the XIII Banking Industry Meeting organized by IESE - IESE
Likewise, he asked the regulators to reflect on how to guarantee that banks and new entrants in the finance sector are subject to the same norms. For that reason, he said, it is necessary that they incorporate new digital capacities.
In the opinion of the executive director of BBVA, creating a circle of trust with the customer, through empathy, is a priority. Trust is the cornerstone of the digital economy, above all with regard to the protection of customer data. And it's the responsibility of banks to operate in a way that inspires trust in the customer.
The new opportunities that the banking industry shouldn't miss
José Manuel González Páramo explained that, in order to guide this transformation voyage and to create a circle of trust, the banking industry should have a common purpose. He identified three possible ways to construct it.
The first of these is to provide a new standard in customer experience, through an integrated offer of services that helps customers to understand their financial situation, to plan, and to make the right decisions.
José Manuel González-Páramo during his speech - IESE
The second of these opportunities, González-Páramo said, is to create and adopt new business models that enable customers to understand and participate in the new environment. On this point, he underscored the strategy of BBVA, which collaborates and invests in different companies, in fields as different as design and “big data.”
Lastly, the executive director of BBVA stressed the importance of the role that banks play in society. In addition, based on the principles of integrity, prudence and transparency that are the pillars of responsible banking, he identified four centers of attention.
The first of these would be financial education, to which BBVA is decisively committed. In second place, he underscored the importance of social entrepreneurship, which BBVA promotes through the Fundación Microfinanzas and projects such as BBVA Momentum and BBVA Open Talent. In the third place, he believes it is essential to promote knowledge, in order to create opportunities for people. Likewise, he made special mention of sustainable finance, that is, the financing of projects based on criteria of profitability aligned with principles, such as the struggle against climate change.