WSBI Managing Director Chris De Noose
WSBI-ADBI Policy Forum and
22nd Meeting of the WSBI Asia Regional Group
6 April 2016
"Banking in a digitised world"
Dear Dean Yoshino,
Dear representatives of WSBI member institutions,
Dear honourable guests,
Ladies and gentlemen,
Dear old friends, good morning,
First of all, I would like to take this opportunity to thank the Asian Development Bank Institute (ADBI) for having agreed to co-organize the 2016 WSBI-ADBI Policy Forum on 6th April and for all supports that ADBI has provided. I am delighted and grateful that ADBI has provided us with an opportunity to gather policy makers from the region and interact with WSBI members in the coming three days. My gratitude also goes to representatives from WSBI member institutions and distinguished guests who have interest to join our event and to share your knowledge.
WSBI members' role in social inclusion
Before I mention the content of the meeting, on behalf of WSBI and its staff, I would like to express my sincere appreciation to our old friends who showed concern for us and sent their sympathy right after the terrorism attack in Brussels three weeks ago. Your kind thoughts give us much comfort and reinforced our belief that whatever challenges we face from those that seek to end decades of social and economic progress, we must remain steadfast.
Looking closer into the causes of terrorism attack, I think it is not a matter of religion, it is a matter of social exclusion, poverty and racism in certain areas of Europe. Social exclusion, poverty and racism are issues that can cause a vicious cycle for any society. There is a real need to find a breakthrough to improve social stability and harmony.
As we all know, social inclusion is central to ending extreme poverty and fostering shared prosperity and ensures that people – in particular migrants –have a voice in decisions which affect their lives and entitle them with equal rights. In this regard, please let me highlight the role of WSBI members play. Representing more than 6,000 banks, they lead the fight against social exclusion via different programmes such as channelling social security payments, providing microloans in particular vocational loans, promoting financial education and integrating vulnerable people in communities through financial education.
There is a saying that when everybody adds fuel, the flames rise high; great things will be done by mass effort. Consequently, I would reassure WSBI members to not underestimate the value that you have created to society and to peoples' everyday lives. You have used your large network to fight poverty, to promote social inclusion and to minimize inequalities. In my capacity as a banking industry representative, I strongly encourage you to continue doing 'what is good for society', such as job creation, promoting inclusive growth and financing micro-enterprises amidst the new forces of globalisation.
WSBI's position related to banking regulation and, in particular, to digitalization
As this is a policy forum, and we have many policy makers in the room, I would like to convey our position on regulation. The banking sector is facing a regulatory tsunami. Since the 2008 financial crisis, new standards, reforms, transposition of international standards, among others, have occured.
In response to all these new developments, WSBI calls for 'better regulation'. Better regulation should mean proportionate regulation: This principle has to be recognised and implemented at every step of the legislative process so that existing and new regulations are applied proportionately to different banks. The 'one size fits all' approach does not work and harms the vital role of locally rooted banks as suppliers of banking services and financing to the real economy.
I am pleased to say that proportionate regulation has been better adopted in Asian countries than in Europe. WSBI members in Asia have been benefiting from the proportionality approach put in place by their national regulators. Let me also take this occasion to thank the national policy makers from the region for support given to savings banks and community banks. I also would like to express my conviction that working together we can create the right synergies to clearly advance in the right direction.
That being said, I would like to highlight some key facts about Asia. As we all know, the phenomenon of the world economy engine moving from the West to the East has become more and more evident, especially following the financial crisis and the Western sovereign debt crisis. The Asian continent counts for about 60% of global growth. Higher growth leads to higher incomes, which can trigger more demands for mortgages and consumption loans and working capitals. The region's financial sector has plenty of opportunities for growth.
On the other side, our banking environment has changed dramatically in recent years. First, technology has changed. Second, the rules have changed. Third, society has changed, and most important of all, our customers have changed.
As the event theme highlighted 'banking in a digitised world', let me take this occasion to highlight our position in particular related to digitisation. The digitisation of financial services presents policymakers and regulators with as many challenges as it does for the banking industry. Digital financial services raise specific risk and trust factors and traditional responses may not be adequate in what many call – the "new normal". Policymakers, regulators and supervisors worldwide have the responsibility to guarantee that all financial services providers, whatever the distribution channel they use, operate on a level playing-field, to ensure that the relevant prudential and supervisory measures are in place to guarantee the security of transactions and the soundness of the institutions involved. They also have the responsibility to make sure that long-term trust and protection of financial customers is specifically addressed. Accordingly, we call on stakeholders, policymakers and regulators to provide an enabling regulatory environment that boosts financial inclusion, also with the aid of innovation and technological solutions, rather than hampering it. Regulation arbitrage should be eliminated to secure a level playing field.
A message for WSBI members
The increasing use of technology has a big impact on consumer behaviour in Asia. One of the observed changes that is affecting banking is that the consumer-decision journey has become increasingly multi-channel. While Asian countries may be at different stages of evolution toward complete digital-banking readiness, most consumers in Asian markets are already using or interested in using alternative channels to interact with banks. If banks are not ready to get the digital strategy right in the here and now, digitisation can lead to losing the customer base and destroy total profit.
So, in like fashion, we must change and adapt quickly and intelligently to the new circumstances. We must be more prepared, more demanding upon ourselves, more critical of how we do things, and better informed. As I so often say – it is really a case of: either Change quickly and rightly or Die!
Do we want a Kodak moment for banks?
We, as true bankers, must:
- First, adapt efficiently to the new regulatory requirements, in a joint effort with regulators, to ensure proportional regulation and a level playing field.
- Second, change the traditional product sales culture to a new customer service culture where the customer is the centre of our strategy, not in theory but in practice.
- Third, embrace and invest in new technologies and use them to our full advantage.
- Fourth, attract new leaders who can identify, understand and manage new business opportunities and emerging risks, and keep pace with the changing financial landscape.
WSBI members are, however, also maintaining their long-standing tradition of adopting new technologies and incorporating them in the products they offer. By doing this, banks improve the customer experience and service offer through a 360-degree approach to doing business in an "always on" world. We do not believe retail banks will become pure "online banks". Our task is to extend the trust that is the cornerstone of our proximity relationship into the digitised world. It should be clear, however, that digitisation is not an end in itself and that the human factor including the ability to promote and sustain trust in the formal financial services system should not be neglected. The importance of this for WSBI and its members is witnessed by a declaration agreed by WSBI members and released in Washington during our World Congress last September. Titled "Taking the digital path, keeping a human touch", it calls on members to embrace technology and to harness technology to become even closer to the customer.
As managing director of WSBI, I would also like to reiterate that our member savings and retail banks play a special role in helping communities and economies prosper. We understand that by working hard to share knowledge, information, experience and best practice in a trusted environment, our role becomes ever more important.
To conclude, I wish you every success in your deliberations and exchanges in the coming three days and a very pleasant stay in Tokyo.
>> Learn more about the event
>> See the event press release