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NFU report: An ESBG member perspective

NFU report: An ESBG member perspective

​​​​A reaction to Nordic Financial Union (NFU) report with Norwegian Savings Banks Association Director Ole Morten Geving

>> See story in latest News & Views

​>> Related: Report insights: Nordic Financial Union's Budolfsen​​​

>> Read the study​

BRUSSELS, 17 August 2018

The Nordic Financial Union (NFU) report gave a lot of food for thought about the burden faced by bank employees when complying with EU banking rules the need for a proportionate approach to banking regulation. What was the big takeaway for you? 

The most important takeaway is that it showcases in a very practical way the implications of a complicated and burdensome set of financial regulation. The report gives a unique perspective by asking bank employees – our stewards – in the Nordic banks how much time they spend coping with compliance issues and how this also affects the bank advisorcustomer relationship. It gives interesting insight and is quite helpful in the ongoing discussion with policymakers about the need for proportionality. In my perspective the report totally supports ESBG’s position, and pinpoints the same objectives we have been addressing and advocating for. For example, analysis makes clear that employees had witnessed that customers seem to be questioning the need for certain parts of customer-focused legislation. It’s an interesting first-hand account of how things are working. It also shows that there is a broad alliance both between the industry representation and workers union on this aspect. 

Do the NFU report conclusions align with what Finance Norway member banks see on the ground? 

I think that we basically see the same situation as the survey results show. We see a jump in the number of reports that have to be filled out, the amount of time one has to spend reading new regulation, and more time needed to address these issues internally, whether or not you have to run a small, simple, local bank seems unnecessarily high. I think that especially on the reporting side, it seems to be in many ways overwhelming. I think you could really question the usage of the information provided to the financial authorities. 

Survey results show that staff stress level has increased. Have you seen that first hand? 

There are Norwegian respondents to the survey, so the figures should give a good indication of stress levels seen also in Norway. How would you respond to one report finding that indicates a sort of tension staff face between providing good customer service and following rules and procedures enshrined in law? 

The report provides an interesting figure that showed 49 per cent of respondents state that one or more of their members within the last 12 months have experienced a conflict of interest between providing good customer service and following rules and procedures. It’s an interesting topic that begs the question: How can one preserve good intention of staff while really helping the customer? And what is the limit of that good intention in certain ways?

I think we like to think of ourselves as representatives of banks who really put our customers first. If you ask advisors in the typical Norwegian savings bank, they promote financial products only if they see that it is in the customer’s best interest. So, I think that savings banks’ customer approach is a bit broader than only selling products and earning money. Have you seen an increase in the number of training sessions since the wave of European banking rules were put in place? Yes. Although Finance Norway doesn’t conduct them directly, our banks do in-house and through bank alliances in Norway who conduct them. Our banks do a lot of training and development with their staff on a daily basis. There is also a regime run within the Norwegian financial industry that provides an authorisation/ certification scheme for financial advisers. Before being an adviser, one must undergo a certain training and one has to pass an examination. There is a follow up programme drilling them on certain aspects. 

What is your response to scepticism among many survey respondents that rules designed to better inform customers to give them a better understanding of financial products and services may be falling short? 

It’s an issue. We live in a complicated world, not just in banking but in other aspects of daily life. Take mobile apps, for instance. People might face the same issue of information overload when downloading an app on a smartphone. Before downloading, the user is given the option to read the 25 or so pages of “terms and conditions”, the fine print that many people just skip over and download. In the world of banking, the amount of information needed is perhaps confusing the customer as much as clarifying things. If that is the case, then the regulation is obviously failing because it doesn’t simplify things for the customer, making it too complex. So banking rules need to keep in mind the burden for the customer as much as the bank and its staff. That said, the industry can play a part in demystifying information. The sector looks for ways to develop better ways of explaining, better ways of communication with the customers. Society has a role to play too. It think there is a need for society to be more financial literate, whereby people have a better personal understanding of basic financial concepts and products, what it means to have unsecured credit, what it means to have a pension scheme, etc. If you ask people on the street if they know some of these basic concepts, I don’t think many will know. This is of outmost importance for people to deal with their financial life, and it has become more and more complex. Technology can help narrow this financial literacy gap. 

A multi-channel approach using technology could help on many fronts. One example is compliance, using technology to help make compliance less burdensome could benefit employees and customers alike. We are moving in that direction. 

Based on the survey results, what should policymakers, savings and retail banks, as well as stakeholders think about in future? 

There are really three things. First, we all need to keep in mind the effect regulations put in place are having and think how things are actually working because of those rules. We have to ask and answer the question: “Is the intention of the regulation being fulfilled?” Second, the banks themselves nee to develop better ways of handling more complex regulation and how they interact with customers. And finally, technology. Using a broad spectrum of channels and approaches could help customers, who could access information when they need it in a convenient way. Using more technology in banking can reduce the load of more “boring”, mundane parts of staff work. That could free up time so that they can focus more on being financial advisers. And it would most probably reduce the insecurity employees feel when coping with complex set of requirements. The reason is that if the computers can scan the forms, gather all the data needed, and do all the checks in a more secure and efficient way, that would reduce that uncertainty and frustration that staff experience. The report hopefully can help spur more progress on all three areas.​