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our guests today
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are mauro guillen director of the louder
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institute at the barton school
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i'm juan pedro moreno global managing
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director of banking industry
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attack center first of all thank you for
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being with us today
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and congratulations on your new book new
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era in banking
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the landscape after the battle starting
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with you juan pedro
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what are the most important trends
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affecting the banking industry
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in our view there are three main drivers
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of the challenges of the industry for
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the next few years
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the first one is driven by the new
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regulation
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after the crisis trying to seek for
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stability
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in the system ensuring the capital is
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ensuring the banks continue to in the
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future as well as trying to find
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better reputation of the industry in in
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the marketplace
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second one and very important as well
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is the demographic transformation that
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the whole world will suffer in the next
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few years
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with the shift of the population in
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terms of
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wealth into asia pacific the growth of
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emerging markets
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as well in combination with the aging of
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the population
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that is a very relevant effect effect
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that we describe
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in in the book and finally the
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technology technology is bringing a new
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disruption
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into the banking industry that is having
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basically two impacts
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the first impact is technology is making
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accessible
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the technology to new segments of
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population making sure that we can serve
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from the banks and new segments of
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population that we didn't serve before
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but also
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the disruption of the technology is
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transferring the power to the consumer
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in this digital era
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that is requiring a new behavior and is
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requiring a new
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services from from the banks to really
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cope with these new demands coming from
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the digital customers
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those are very interesting trends
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focusing on consumer behavior
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what shifts are creating new
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opportunities for banks
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well i think there are essentially very
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important opportunities emerging
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in different segments of the population
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located in different parts of the world
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we have first of all the middle class
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what we are witnessing is essentially
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hundreds of millions of people
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in places like china or india brazil
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mexico
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who were poor just a generation ago 20
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years ago today they have purchasing
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power and they're becoming
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bank customers important bank customers
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in great numbers
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then we also have at the very top we
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have an accumulation of wealth so we
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have people with a high net worth
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and that they are also demanding new
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banking services
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at the same time we also see as juan
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pedro mentioned the growth
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of the 65 plus population those people
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who are now going into retirement
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we also see the rise of the millennial
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generation
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and these are the people who are now
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between the ages of 15 and 25
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and finally of course we have the
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unbanked we have the people who are
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still not bank customers in the poorest
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markets around the world at least
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developed markets
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at the bottom of the pyramid markets so
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those five segments represent
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enormous opportunities for the banking
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sector in the next five years or ten
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years
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thank you what did you see juan pedro
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new technologies doing to help banks
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cater to the needs of these consumer
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segments
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i think these new technologies mobile
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banking digital banking
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is introducing a number of elements that
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can be understood as
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threats or opportunities for banks on
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the one hand these new technologies are
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entitling banks to serve new segments of
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population as we said before
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and bank people low income people before
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they couldn't be served at a reasonable
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cost or an efficient in an efficient way
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today technology led banks to serve
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those segments in an efficient way and
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will enlarge
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the customer base that many banks but
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also it's opening the opportunity
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for new entrants that are having a very
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good reputation on the digital space
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to enter into the financial services at
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low cost with low barriers
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and at a very good competitive
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with a very good competitive approach
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taking advantage of the reputation they
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have been able to develop in this
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new life of the consumers in the digital
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environment
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let's get deeper on digital banking what
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does digital really means to banks
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well swan pedro just mentioned we have
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on the one hand
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major threats that the digital
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revolution is going to
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bring about for the banks we're going to
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see
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a new entrance into the industry we're
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going to see non-bank
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companies or institutions providing
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financial services
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and we're going to see the importance
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or the role of the physical
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infrastructure of branches
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change over the next five or ten years
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now on the opportunity side i think
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banks are located in a strategic
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position
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in the competitive landscape and they
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could use the new technologies digital
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technologies to turn themselves
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into information hubs
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juan pedro are new regulations going to
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change the competitive landscape for
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banks
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it may i think it it is really a matter
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of the reaction of the banks i think
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new regulation focusing on rising the
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capital requirements
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of the capital adequacy of banks is on
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the one hand
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creating a turmoil in in the industry
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that is bringing concentration
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consolidation of banks
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a new environment of return on equity
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that will require
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big investments to really be competitive
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in the marketplace with other industries
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but on the other hand a regulation is
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also a barrier for banks to really
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avoid other entrants to go into the core
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of the of the banking businesses there
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is a
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window of opportunity for banks to
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really take advantage of that and
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compete with the new entrants in
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lower regulated in environments on the
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digital on the digital space on the
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other end in addition to the capital
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requirements i think it's very important
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to understand
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that as well new regulations is focused
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on
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bringing back reputation and stability
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to the sector
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which is something that has been very
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affected during during the crisis and
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it's something that banks need to
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recover
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customer protection regulation is a very
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important a very important element
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not only representing a lot of
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requirements for banks but also the
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opportunity to
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improve and enhance reputations of banks
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in the market in the market
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another important topic is trust how can
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banks repeal trust with today's
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consumers
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well you're absolutely right i mean one
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of the biggest issues that
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came up during the crisis has been the
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gap that exists between the uh
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opinions and the views of normal
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citizens and bank customers about the
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banks
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banks have lost a lot of credibility and
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so they need to rebuild this trust
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what i think is really important is for
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banks not to approach
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this issue from a public relations
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perspective
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what they need to do is to embed this
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confidence
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into their culture their processes and
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their technology they need to be
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much more transparent and of course they
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need to build on whatever loyalty
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remains on the part of customers
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without that banks are going to find it
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very difficult to compete
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over the next five years or ten years
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what is the best way for banks to cope
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with non-bank competitors
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i believe as i said before that
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regulation is still
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a barrier that may be an advantage for
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banks for a
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small window of opportunities they can
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take advantage of so i would suggest
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banks rather than to protect themselves
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on the core banking to really be
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proactive and compete openly
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through collaborations and also through
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competition in these new markets that
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are being created out there
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through the digital revolution
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especially in the payments as i
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as i mentioned before so my
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view here is that banks has a great
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opportunity to really create new
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products and services digitally native
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that will help them to recreate
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reputation in the market but also
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to cope with some new markets and
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businesses that are being created
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okay and this is the last question which
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geographies will witness the highest
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growth
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in banking services well i actually
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believe that there's going to be growth
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pretty much all over the world of course
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we're going to witness in the next five
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to 10 years a lot of growth in banking
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services
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in the emerging economies and we're also
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going to be
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seeing a lot of growth in the bottom of
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the pyramid markets in the least
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developed countries
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but i don't think we can forget about
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the developed markets like europe or the
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united states or japan
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because as i mentioned earlier we are
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witnessing right now the rise of
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market segments that are going to become
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i think very important
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for banks that's that includes of course
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people above the age of 65 that includes
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young people the millennial
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generation and that includes also
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wealthy individuals
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so i think growth in financial services
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is going to be taking place
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across the entire global economy over
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the next five to ten years
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mauro juan pedro thanks for your time
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you
