Spanish banks are leaders in financial innovation, with the ultimate goal of being more efficient in customer service. Customers demand a new multichannel approach, with digital and mobile channels playing an increasingly prominent role in the search for greater functionality. Optimizing the customer relationship requires greater knowledge and transparency, which reinforces mutual trust between customers and their banks. All of this necessitates high investment by credit institutions, which is only possible if they are profitable. Bank profitability is also key to ensuring appropriate financial conditions to support medium- and long-term economic growth.
Innovation applied to financial services (fintech) will likely lead to changes in the banking model, in the way financial services and products are provided, and also in the very structure of the entities. This represents a true disruption in the sector that we can barely glimpse at this moment. Indeed, contrasted with the breakneck speed of change anticipated by various analyses is the reality of the figures, which suggest that a broad customer base continues to demand a more traditional model and approach. More time is needed for everyone to truly assimilate the advantages offered by new technologies. Banks must therefore seek a balance in the preferences of their customers, the true center of their strategy, satisfying today’s demand while providing the best possible response to the increasing digitalization of society.
Continuous technological advancement helps banks become more efficient. Machine learning and big data are good examples of this. Real-time information analysis improves the service provided to the customer. The progressive automation of routine work increases transparency, while also allowing for higher quality service. In any case, the important thing is the relationship with the customer. Bank employees remain fundamental under a framework where personal relationships prevail. Let us then consider a complementary format for the future between the possibilities offered by innovation and professional expertise. All of this will serve to reinforce the relationship with the customer, supported by high levels of appreciation and trust toward their institution.
The ECB repeatedly calls on European banks to improve their profitability without taking on excessive risks. However, it is difficult to be more profitable in a scenario dominated by current high competition from both within and outside the sector, and with official interest rates at artificially zero levels. Nevertheless, the efforts made by European banks to adjust balance sheets, the consolidation of the sector itself, and economic strength are allowing for a recovery in profitability. The challenge for the future is twofold. On one hand, this improvement in profitability must be maintained; on the other, it must be made structural. Efficiency is key to achieving this. And everyone—banks and customers alike—will benefit from this virtuous circle generated by increasingly efficient and profitable entities.
The Spanish banking sector has always been characterized by being highly modernized and standing out in Europe for this reason. With new technologies, perhaps this technical sophistication is now more visible to users. Many technological developments are focused on improving customer services. Others are oriented toward greater efficiency in internal operations. High investment is needed to adapt to the financial innovation demanded by customers in an environment as competitive as the financial one. Spanish banks are clear that investing in the future is key to overcoming all the challenges facing the sector. But it is also key for society itself, given the importance of financial innovation in its development.
José Luis Martínez Campuzano, AEB Spokesperson
