The health crisis has brought out the best in a sector that has dedicated all its human and economic resources to minimizing the pandemic’s impact on families and businesses. Spanish banks are now a European benchmark for the effectiveness of the measures taken, and for the guarantees and security they offer when providing their digital services, which are essential in these challenging times. In a terrible and exceptional situation like the current one, your main achievement is that everything continues to operate normally.
However, it is a sector that some constantly disparage and question, oblivious to the good performance and dedication of its thousands of workers, whether due to the pursuit of self-serving interests by third parties, a lack of understanding of its function — which is to help individuals and businesses move forward and realize their projects — or for other, rather subjective reasons.
Reduced competition in the sector is a recurring criticism that overlooks, among other things, the view of European authorities who warn of the risks arising from excess installed capacity in the sector. They advise that banks need to charge for the services they provide and offer financing at an appropriate price, commensurate with the risk assumed. At the same time, they insist on the benefits of consolidating a sector that must compete on unequal terms with new digital operators, who are still free from the heavy supervisory and regulatory burden that banks carry. Authorities, and global supervisors, advocate consolidation as the ideal formula to reduce existing overcapacity and continue providing good service without questioning its future sustainability. It is not precisely the lack of banking competition that concerns them, but rather the impact of the oligopolies represented by large technology companies providing banking services. This requires regulation and supervision to adapt and ensure competition for both customer protection and financial stability.
Fees also feature in criticisms that overlook the fact that all good service requires an appropriate price. We must all be aware of this. Failing to acknowledge it could lead to a deterioration of service in the best-case scenario and its disappearance in extreme cases. Nevertheless, according to a Deloitte report on banking services in Europe, Spanish banks offer more financial services to their customers at lower prices. They also maintain several free services, which is not the case in Europe. The high competition among banks in Spain benefits the consumer, who has many options when choosing products and services, and declares satisfaction: 7.42 out of 10 is the average satisfaction score for banking customers, according to the latest Funcas survey.
Recently, during a radio interview, a listener claimed that banks pay little for savings. I clarified that official interest rates are negative, that at present one has to pay to buy a good portion of European public debt, and that private banks are charged for deposits at the central bank itself. In short, according to existing public information, banks make the effort not to charge families for deposits. This exceptional scenario of negative rates is precisely one of the reasons for the expectation of low profitability weighing on the sector. In any activity, profitability is essential to guarantee the continuity of service. And the banking sector is no exception to the rule. What has always characterized it is its capacity for adaptation to any difficult scenario and innovation, which have always benefited the customer.
Coordination among economic agents in Europe and globally is proving key to mitigating the impact of the health crisis. Banks have collaborated in implementing the measures established by economic authorities, have transparently and responsibly channeled central bank liquidity, and have also voluntarily adopted sectoral measures more generous than those of the public sector. All of this has been possible because, at the beginning of the crisis, the sector had liquidity and capital reserves, thanks to the significant effort made over the last decade. Naturally, this does not make it immune to a prolonged scenario of uncertainty and economic weakness. Banks are aware of this, and without ceasing to fulfill their ultimate objective — which is to provide the best possible financing and services to families and businesses — they are striving to strengthen themselves and become more efficient. For them to continue succeeding in their endeavor, a success that we will all share, it is important to act responsibly towards the sector.
José Luis Martínez Campuzano, Spokesperson for the Spanish Banking Association
