The customer is the priority for banks, which design their strategy to respond to today’s desires and anticipate those of tomorrow, which are increasingly greater and more immediate. Receiving attention twenty-four hours a day and anywhere is a daily occurrence thanks to digitalization, the banking sector’s major commitment for years. Because banks anticipated the digital transformation of society, the high level of protection that customers had in their analog activity remains unchanged in their digital operations, as has been evident during the worst moments of the pandemic, with all financial services operating at full capacity and with total normality. Consumer collaboration, however, is key in the digital age. Apart from the protection and guarantees provided by banks, we must be aware of the need to protect our data in the online world.
Technological advancement and its reflection in digitalization have allowed the emergence of new competitors and business models related to financial activity that compete with banks in the provision of financial services, although focusing only on the most profitable ones. Unlike these technology companies that offer banking services under much more superficial regulation and supervision, banks serve all their customers, regardless of whether they are accustomed to new technologies or prefer more traditional attention through bank branches. And they are a guarantee of protection in this Fintech revolution we are witnessing, the result of applying increasing technological innovation to financial services, which brings many benefits to the user, but also some risks that must be known.
If we talk about risks for the consumer, we must ask ourselves whether the user of financial services understands, in most cases, the type of entity or the legal personality behind a new innovative brand and, therefore, what legal protections they have in the event of a failure or error. It is common to use terms such as ‘neobank’ or ‘digital bank’ to refer to some of the new companies that, in many cases, do not have the status of a credit institution and cannot carry out the activities legally reserved for them.
Monitoring what happens in such a dynamic market with so many new players is becoming a complex task for financial supervisors and also for regulators. Beyond competition issues, which are also a concern, authorities are focusing on risks to consumer protection and financial stability, because encouraging innovation and competition must never translate into less protection for the financial customer.
Customers must know clearly how their money is protected, something they do know in the case of banks. For example, some products offered as ‘accounts’ are not considered deposits and, therefore, their balances are not covered by the Deposit Guarantee Fund of credit institutions. There is also concern about the increase in lending activity outside the banking network. Although diversification in sources of financing for companies and families is positive, it must always remain under the regulatory and supervisory radar.
Banking is a disciplined sector that responds to extensive and highly demanding regulation, which has undergone many profound changes since the global financial crisis triggered in the United States in 2008. Unlike other listed companies, banks are subject to specific regulations, both EU and Spanish, which are more advanced than corporate governance requirements. Rapid adaptation to these requirements has enabled Spanish banks to significantly increase their solvency and resilience, thereby meeting customers’ needs during the worst of the health crisis.
The strategy of banks involves satisfying their customers. Their commitment is to offer the necessary financial services to all consumers. It is the customers who decide which channel they choose among those available to communicate with their entity: branches, telephone and digital banking, collaborating agents, and ATMs. The banking sector is also entering into collaboration agreements with other institutions and companies that complement the communication channels of the entities with the sole purpose of continuing to reinforce the improvement of the quality of customer service.
In addition to the change in customer habits and customs, as they visit branches less frequently, banks operate in a scenario of low profitability as a result of the prolonged scenario of negative official interest rates. To adapt to this environment, banks are carrying out the necessary structural adjustments, changes that supervisors have been demanding for some time and that are undertaken in order to continue playing a key role in overcoming the crisis. The priority for banks is to support families and businesses and drive that post-Covid economic recovery that we all desire, based on a new economic model better than the previous one, more respectful of the environment, more digitalized, and more beneficial for all layers of society.
José Luis Martínez Campuzano, spokesperson for the Spanish Banking Association
