Current academic debate focuses on productivity and the troubling fact that it has not improved as expected despite technological progress. The significant room for manoeuvre used in expansionary monetary policy also rests on moderate inflation, a consequence of slower productivity growth. Poor productivity performance is even blamed for an impact that should be assessed on inequality in income distribution worldwide. The financial sector, however, focuses on efficiency. If productivity is the ratio between output and the factors used, efficiency goes further because it incorporates how output is achieved. Thus, compared with the quantity variable that prevails in productivity, efficiency is based on quality.
We must not confuse efficiency with effectiveness. Being effective refers to achieving the objectives set within a specific period of time. Efficiency is key to sustaining this improvement with the fewest appropriate resources and by doing so in the best possible way. Banks strive to become increasingly efficient, both to improve their internal transformation process and to offer the best service to consumers. All of this is done with particular emphasis on security and customer protection, which is their raison d’être.
The digitalisation of society is an unstoppable, self-reinforcing process that adapts to the obstacles that arise along the way. It is a disruption, like the steam engine, the electric generator and the printing press were in the past, with enormous potential economic benefits, although its impact has so far been limited. Although it is still too early to answer all questions about its development, technological progress and digitalisation are changing the way banking is done in line with the evolution of society, in which new needs arise that institutions seek to meet.
The process of financial digitalisation also encourages the emergence of new competitors that provide banking services but lack a banking licence. Regulation is driving this new competition, seeking greater cost benefits for customers. It is important that regulation takes a medium- and long-term approach, so that customers have the same protection that banks provide and the efficiency of the system is not undermined. Regulation should not prioritise short-term productivity over medium- and long-term efficiency. Nor should it call financial stability into question; to that end, it is necessary to address issues such as regulatory asymmetry between banks and their new competitors, and to ensure that competition develops on a level playing field in which all parties meet the same transparency criteria.
Digitalisation offers enormous opportunities for the financial world, although it also requires a significant adaptation effort from everyone. Banks must adapt to their customers’ growing demand and thereby lead the process of economic digitalisation. New competitors must adapt to the strict regulation and supervision that pursue the dual objective of protecting customers and ensuring system stability. Authorities must adapt their regulation so that it does not become an obstacle to innovation. And customers must adapt to the new digital environment, take advantage of the benefits it offers, and be aware of the caution required to live in the new digital era.
