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