Chris De Noose, Managing Director, WSBI
24th World Congress of Savings and Retail Banks
September, 25, 2015
Round–up and Conclusions
Ladies and Gentlemen, good afternoon!
It is an honour and pleasure for me to take the floor in this closing session of the 24th World Congress and to draw some conclusions from the interesting speeches and multi-faceted discussions we have had over the last one and a half days on the topic of "Main Street Banking in a Digitised World".
I propose to present briefly:
- the main key take-aways from the Congress or what I like to call "The New NORMAL", and
- WSBI's key messages to regulators
Congress Key Take-away - The New NORMAL
I think that you will agree with me that the ideas and discussions that we have enjoyed over the last one and a half days of the Congress have been very stimulating and thought provoking. By virtue of conclusion I would just like to outline a few of what for me are the main take --aways from the Congress. In a word these reflections together constitute what I consider to be "The New NORMAL" for the financial services industry.
We are in the midst of a digital revolution as stated by Commissioner Oettinger and all of this is happening at unprecedented speed and within a context of a Tsunami of international regulation, as pointed out by President Haasis in his opening speech. We have seen how digitisation has already transformed several industries such as the book and the music distribution industry and our approach to booking travel and accommodation has changed out of all recognition with disrupters such as Airbnb, Ryanair and Uber.
FINTECHS such as STRIPE and VENMO, to name just a few of many in the payments business, are challenging the business models and revenue streams of banks. As pointed out by Chris Skinner, in the age of internet 3.0- what he refers to as the Internet of Value- banks have to face the conundrum of how to make money when all of their traditional product, such as payments, are being given away for FREE. In his view the answer for banks is to become more valuable to their community and their customers by becoming more relevant and caring.
We are also keenly aware that Customer expectations are changing in line with the diffusion of innovations. These "technological innovations" have become part of the fabric of everyday life in a hyper-connected ("always-on") world. The digital natives or millennials will not be happy with an environment that does not have "always on "messaging, social networks, multi-touch tablets and other such technologies. Today when people visit the bank less and less, the reality –as pointed out by Camden Fine- is that smart phones are an extension of themselves and if the service is not in the form of an App it does not exist. Millennials are a very important component of our customer base today and we face the threat of appearing old-fashioned and out of touch – not to say irrelevant if we do not provide a good "always-on" customer experience.
The other big challenge is how to strike the balance between consumer protection and using in-house and big data to data to improve the customer experience on all customer touch points in an Omni-channel approach. Linked with this is the big threat of cyber security, which is one of the largest challenges that banks, governments and other industries have to tackle today.
In my view, it has now come to crunch time, and we must all take a big leap into this new and rapidly changing world where :
- banks are no longer in the driving seat
- they have to contend with fierce competition from disruptive new entrants and heavy regulation – not to mention
- ever more demanding customer expectations.
As I so often say –it is really a case of:
- Digitise or Die and
- Transformation is necessary for banks to remain relevant
In 'the new normal', banks have to be leaner and more efficient, of course and there will be no stopping of innovation. But will the customer care if you are a bank or a software company, as long as you deliver on your commitments?
Probably not - so our challenge is to extend the trust that is the cornerstone of our proximity relationship into the digitized world.
As the Managing Director of the WSBI, I am proud to announce that we are working hard to ensure that our member banks in all continents:
- have the appropriate regulatory environment in which to conduct their business – our international advocacy efforts. Our core message in this respect is the need for proportionate regulation based on the principle of same risks- same rules.
- can share knowledge, information, experience and best practice in a trusted environment
In this latter knowledge sharing space, we are currently examining ways and means of accelerating responses to digitisation and transformation by WSBI-ESBG members. We already recognise the importance of digitisation and innovation and it is a recurrent underlying theme of all of the exchanges of information and best practice that take place at various levels in our organisation.
We can also contribute to the community expertise garnered in developing and emerging economies, notably through the WSBI Doubling Savings Accounts for the Poor Programme, with respect to mobile and data analytics supporting broad financial inclusion, for instance.
Remember and retain our core values - The Washington Declaration
In my view it is essential that WSBI members retain their values and traditional business ethic throughout this transformation and digitisation process. Although WSBI members are very heterogeneous in terms of size and legal form, we share a common code of values.
Our brand is characterised by the provision of a broad and diverse range of retail products and services to individuals, households, small and medium- sized businesses and local authorities. Close, interactive relationships with the communities we serve and the financing of the real economy is central to our vocation. WSBI members operate a double bottom line approach to banking by balancing the need for sustainability and a return to society, also in the form of financial inclusion and financial education.
This is the basis for customer trust, which is recognised as one of bank's key capital assets.
Digitisation changes the way processes are carried out and changes our interaction with other human beings and objects. It provides more choices and ways and means to connect with and create deeper client relationships, also thanks to the "always – on" presence. Digitisation is thus also a catalyst for social innovation, and challenges how creating value for society is organised.
We should also see digitisation as an opportunity to reinforce our profound commitment to customer proximity. And digitisation is indeed an essential support in reaching out to the 2 billion people worldwide, who currently have little or no access to financial services.
I am proud to announce that, earlier this week, the WSBI General Assembly endorsed a commitment to contribute 1.7 billion customers and 400 million new transaction accounts to the World Bank Group's Universal Financial Access 2020 Goal. This numeric commitment reinforces WSBI's continued engagement with its 'Account for Everyone' goal contained in the 2012 Marrakech Declaration.
WSBI recognises that achieving universal financial access by 2020 requires a collective effort and we are honoured to be part of the initial Coalition of Partners who have been invited to contribute to this global cause.
I am also proud to announce that, yesterday, President Haasis and I signed a Memorandum of Understanding with the World Bank Group. This Memorandum of Understanding paves the way for a strategic partnership between our organisations and will also constitute the framework for support from the Wold Bank Group to WSBI and its members to accelerate the financial access and inclusion process that they have committed to under the Universal Financial Access 2020 Goal,
These are some of the main messages that we have incorporated into a Declaration, which is traditionally issued at the end of each WSBI World Congress. This Washington Declaration on the theme of –"Taking the digital path, keeping a human touch" summarises the main strategic advocacy goals of WSBI for the next three years.
WSBI's message to regulators:
Regulation is an important enabler or inhibiter for banks facing the challenges of this digital revolution that we are experiencing. I would therefore like to conclude my speech with the following key messages that WSBI wishes to pass on to the regulators:
Enabling innovation, fostering trust
- Innovation presents policymakers and regulators with as many challenges as it does for the banking industry. And traditional responses may not be adequate in this new world. We believe that policymakers, regulators and supervisors worldwide have the responsibility to create and apply a regulatory framework that allows and fosters innovation, but simultaneously ensures the security, data and consumer protection that is key to preserving trust in the financial system.
The importance of data
- The battle for payments, for example, has become a battle for data and it is important that banks use the data they gather to improve the customer experience and service – of course in full compliance with applicable legal obligations.
Level playing field and clear legislation
- We fully support legislation that protects customer privacy. But we also expect regulators not to place incumbent savings and retail banks at a competitive disadvantage by constraining them with more onerous data protection obligations than those applicable to other, essentially non-bank players. Clarity and stability of legislation is essential in this field too.
Leave space for market players to deliver
- Where strong consumer protection and competition legislations are in place, WSBI believes that legislators should sit back for a while and let market players create, test, fail, improve, and deliver.
- In summary, WSBI calls on stakeholders, policy-makers and regulators to provide a regulatory and operational enabling environment that boosts innovation and technological solutions rather than hampering them.
Finally, I would like to assure you that I and my colleagues at the WSBI Secretariat remain at your service and please call on us if we can help you in any way.
In this digital world, communication has become very easy as we are just one click away!