La banca española da señales de fortalezabut desafíos are piling up on the horizon. The starting point appears solid, with record gains in the last financial year – up 7% across the sector, high income and low credit risk.
Economic growth, in an environment of stable interest typesI would point in the same direction.
However, in addition to these good results, a deep transformation is needed to simultaneously face technological progress, the most complete regulation, the greatest competence – at the hands of fintechs, neobanks and other new actors – and a radical change in client habits.
So the panorama promises big changes in a sector that has achieved some stability after the upheaval of the financial crisis.
The technological revolution demands, first of all, that the bank modernise core bankingIt is decided to promote more digital models based on services, commissions and platforms. The challenge is to do this without interrupting the operation.
Artificial intelligence and automation are entering the economies of scale that predetermine new mergers in the sector
Because migrating from legacy platforms, hard-to-update, cloud-based, open application programming interfaces (APIs) and modular architectures requires an operational challenge and high transition costs. The new scenario requires interoperability, not just digital channels.
Likewise, this transition must take into account the emergence of new actors at its core international level, each more competitive and connecting very well with the habits of digital customers. Fintech and neobanks that operate completely online, in physical offices, operate with lower structural costs and operate like a traditional bank with lower prices and more agile services.
Expertise is thus growing very rapidly especially in the area of online shopping, asset management and digital assets.
More generally, Artificial intelligence and automation are entering the economies of scale that predetermine new mergers in the sector. It’s not just about building or managing intelligent agents, ensuring data quality and managing operational issues.
Greater use of technology in banking has created cyber risks that are more aggressive and sophisticated. Therefore, it is necessary to strengthen security and incorporate cyber security experts and hybrid professionals who integrate past knowledge of banking, regulation and technology.
The growing complexity of digital operations draws on interconnected system resources and reliance on technology tests is critical
In short, AI can maximize the benefits of the bank, but it requires important twists and counts on specialized talent, from which the wind can assume the concentration of entities.
Another big challenge is regulation: its technological transformation has motivated an increase in the European regulatory burden, especially with higher demands on cyber security, payment systems, customer protection, operational management and sustainability. Because the increasing complexity of digital operations draws on interconnected systemic risks and reliance on technological evidence is critical.
Currently, 70% of the European Bank’s technology experts are from outside the EU and 50% from the EEUU – so the cloud from which all the data is stored is controlled by only four great technologies. It is no exception that there are heightened requirements for operational resilience to guarantee business continuity in the face of cyber attacks, technical failures or extreme weather events.
The EU considers it necessary to count on robust recovery plans and operational test tests, similar to solvency tests. As with AI regulation to oversee the transparency and success of algorithms.
Another aspect of regulation is climate change, so in addition to integrating ESG criteria into securities management, the bank carefully evaluates physical and transformational risks and exposure to contaminating sectors.
The heavy regulatory burden in Europe coincides with the Trump-led bank deregulation process, which may exacerbate the competitive gap between European and mainstream banks. In the US, capital requirements will be reduced by 14%, representing an additional $2.6 billion in financing capacity, and increase in financial income of state banks by 6%.
Even at a slower pace, UK regulators could follow the North American path.
All this is happening in the context of the fragmentation of the European market, which makes it difficult for pan-European banking mergers to consolidate a European financial system capable of competing in a global environment. A more fragmented context in which economic decay begins blocs EEUU, Europe and China, and geopolitical tensions affect capital flows and financial risk.
Overall, the Spanish bank is part of a solid capital position, but future stability depends on adapting its business model to a disruptive technological and regulatory environment. The goal they have: to continue to innovate and adapt to technological transformation, to face various regulatory challenges and pressures.
And in their own time, to face the risk of financial exclusion and digital disruption for vulnerable groups. It will have a large volume of inversion, with a common vision of a key sector for the future of the Spanish economy.
*** Mónica Melle Hernández is councilor of the Chamber of Cuentas in Madrid and professor of economics at UCM.
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