In light of the rapid emergence of increasingly sophisticated digital banking services and the European Commission’s strategy for a Digital Single Market, in June 2015, the European Banking Federation published a discussion paper on “The digital transformation of banks and the Digital Single Market”. This paper serves to encourage discussion and reflection among EBF members and EU stakeholders on the impact of digitalisation of banking services in Europe. It aims to feed into the EBF Blueprint for Digital Banking, to be published on 17 September 2015.
In the world of banking, the rapid uptake of digitalisation has led banks to accelerate the rethinking of their traditional business model including their bricks-and-mortar branches. Modern bank branches have been designed with equipped self-service areas (with tablets and new digital technologies) and private areas (to provide immediate personalised advice to customers who request it), banking instruments (Intelligent ATMs, digital signage, etc.) and digitisation of all processes (internal and external). Investing in business incubators and buy-outs, hiring digital innovators and funding FinTechs are examples that show how the banking industry supports technical innovation in financial services, in particular, in payments.
Banks focus on the customer experience. It is clear that banks need to respond quickly and efficiently to customer demands while keeping services safe and simple to use. Banks also take into account all customers to make sure that non-digital consumers are not left behind.
There is today an obvious need to determine more clearly certain aspects of the Digital Single Market the European Commission (EC) wants to establish. Creating the DSM is one of the ten priorities set out by EC President Jean-Claude Juncker. When Vice-President Ansip in May presented the DSM Strategy, he underlined the importance of making the European Union’s (EU) single market fit for the digital age. It means tearing down regulatory walls and moving from 28 national markets to a single one. Ultimately, it is crucial to build the right framework to facilitate competition, innovation and to ensure that consumer protection, trust and security are maintained.
The EBF Blueprint will notably present the position of the banking sector on the digital transformation of banks, the bank of the future, the challenges and opportunities on key issues such as big data, access to online banking services, payments, cyber-security, cyber-technologies, inconsistencies between legislations applying to the banking sector etc…
It will notably discuss the following elements:
- Banks are at the heart of digital innovation. They are redefining business models; proposing innovative products/apps; engaging in FinTech partnerships and financing innovative starts-ups. Banks keep putting customers at the centre of their strategy.
- It is crucial to create an EU Digital Single Market that facilitates the development of all European businesses – including European banks – and lets them contribute to growth and employment.
- The banking sector supports a competitive and innovative EU Digital Single Market which safeguards existing consumer protection, trust and security. To protect consumers and their data within a new digital economy, companies offering services similar to banks’ and facing comparable risks should be subject to appropriate and equivalent rules. This implies the need to find the proper balance between competition, innovation, security, and consumer protection. Security should not be sacrificed at the expense of competition and innovation.
- European banks – as well as other innovative market players – aspire to be future ‘European champions’ in the digital age. European banks are positioned not only as innovative partners investing in innovative financial technology; they are also keen to see the economic benefits of a truly effective Single Market. This objective warrants further reflection by all EU stakeholders. And more specifically, reflection on the numerous aspects relating to banks in the Digital Single Market and the possible role of digital financial services when it comes to establishing a Capital Markets Union.
On 17 September the EBF will organise its annual conference titled ‘A Brave New World for Banks’. The event will focus on the need for our sector to adapt to its changing environment. A specific session on digital banking will obviously be part of it. It will also be the opportunity to present the EBF Blueprint on digital banking in front of a broad audience including bankers, national trade federations and policy-makers.