Banks will face several challenges in the future, including profitability, the implementation of new technologies, and new non-banking competition. We must not forget other equally important challenges such as reputation and regulation. These challenges appear to be independent, but they are not. Technological advances not only represent an opportunity for banks to reduce their costs, but also facilitate the offering of new products and better customer services. Digitalization leads to greater efficiency in the financial sector, although what is truly important is that customers can make decisions with absolute transparency. Furthermore, the digitalization of the sector fosters interaction between users and their banks, which must always be accessible through any channel. Despite the rise of online services, most Spanish customers continue to opt for visiting physical branches for the time being.
Economic recovery and the more than likely monetary normalization will enable the improvement of bank profitability. Greater technological efficiency will in turn contribute to the improvement of their results. Work well done, under the principles of transparency and responsibility, will gradually lead to an improvement in the image of the financial sector. Of the sector as a whole, since this assessment is very positive at the individual level.
But where does regulation fit in here? We understand that it is an element of market organization and free competition. That is why it is crucial that it be studied in detail and focused on the medium and long term. The limits of banking regulation should be entrepreneurship, digitalization, and even the internationalization of credit institutions. The risk derived from excessive regulation is that it reduces or limits the room for maneuver of banks to fulfill their three main objectives: solving the financial problems of families, financing growth, and managing savings.
The Great Recession had a clear financial origin, although its depth and duration can only be explained by the underlying weakness of the economy. Nine years have already passed since the beginning of the crisis and we have not yet fully overcome its consequences. International authorities have carried out a process of reformulating banking regulation, which is increasingly complex and demanding, with a dual objective. On the one hand, to minimize the risk of suffering a similar crisis again and, on the other hand, to limit its potential damage.
