Session 2: EU Financial
The second session of the Second Plus Europe Conference was planned to explain Possible Models of Retail Banking in Europe. The moderator of the debate, Josep Soler, opened the discussion with a challenging question: How can we regain the trust of customers in credit institutions? According to Soler, a possible solution would be to improve legal protection of customers and introduce the professional responsibility of bankers.
Wolfgang Neumann commented on the German banking sector and recalled that long before the crisis, the ideas coming from the European Union were to deregulate the banking system with emphasis on the private character of a credit institution. He highlighted the importance of the local banking. He also pointed out that local banks tend to invest in local enterprises and that Germany came out of the crisis thanks to a strong small and medium size enterprise sector. Neumann’s main advice was to diversify the banking system, assuring the coexistence of small, big and medium size banks.
Sébastien de Brouwer also put an emphasis on the need of a pluralistic banking sector in Europe. He commented on the important cost of compliance with the new regulations related to investor and consumer protection. Mr. De Brouwer referred to the CDR II Package (Transposition of the Basel III Package into European binding law) and highlighted that the new regulation has one main objective which is to avoid tax payers to pay for banks mistakes when they become insolvent.
New tendency in customer approach
Concerning the retail banking, De Brouwer commented on the new tendency in customer approach. He explained that nowadays customers have no difficulty in switching between banks since loyalty does not play a big role anymore. This attitude is partly caused by the digitalisation of the sector where a customer can access financial services through virtual platforms.
Sjerp van der Vaart, expressed his opinions about the sharp contrast between banking model in the 90s and what we face now. He pointed out that two decades ago the regulation and supervision did not exist and that now the Banking Union is drastically changing the model.
He also left the public with few questions: How competitive can our bank system be in 2025? Can the European Central Bank cope with the new authorities? Can the Economic Union survive without the Social Union? He finally touched upon the risk of overregulation and the need to stop any regulatory measure which impedes the advancement and the competitiveness. He indicated that the new capital requirements impede the access to financing for small and medium size enterprises.
Albert Verlinden commented that financial crisis led to reduction of numbers of financial institutions and that many decided to merge to survive. This caused that employees that considered each other’s competitors were suddenly working under the same flags. Concerning the retail banking, Verlinden advised that financial institutions should focus more on giving right advice to their customers instead of only selling commercial products.
After the interventions of the panel the public was given the floor. The audience raised a question concerning the diversification of the banking sector and also inquired about the mortgage market in Europe.