Transforming banking for customers: a regulatory perspective - Address by Deputy Governor Ed Sibley to the BPFI National Conference

• Cultural change is needed to restore and repair trust
• Too many examples remain where firms have to be pushed to change behaviours
• Open banking, fintech and technological advancements will drive significant change

Full speech

Speaking to the BPFI National Conference Deputy Governor, Prudential Regulation, Ed Sibley, addressed some of the key drivers of change for banking and payment services, with a focus on the necessity of cultural change to rebuild the trust lost by previous failures. He also covered three other types of change of particular significance; macro-financial developments; technology and regulation.

On the macro-financial environment, he noted that the protracted low interest rate environment continues to weaken the resilience of banks across Europe,  with resilient, profitable banks are able to accrete capital, which in turn puts institutions in a stronger position to meet regulatory requirements, with the ultimate result being the supply of reasonably priced credit to the consumer and economy more broadly.

On technological developments, he said that fintech presents “an opportunity for the financial sector to become more efficient and generate value for consumers” and noted that, in light of the second Payments Services Directive, that data sharing and open banking will define the future of retail and commercial banking.

On regulatory matters, he said that while continued regulatory developments may have made some business lines more costly, regulation remains necessary to ensure the safety and stability of the system as a whole. He said that “in numerous ways, the banking industry has consistently failed its customers over the last decade” and that while much discussion focuses on digital and innovation-driven change, cultural change is required to repair and restore trust.   

He concluded by saying that there remain “ too many examples where firms are having to be pushed too hard by the regulator to address failings and remediate issues, where the focus is on the letter of the law and not the desirable outcome.”