The world of finance, with its products and markets, is undergoing a deep transformation. Indeed, from the standpoint of technology, the instruments made available to operators over the past 10 years have revolutionized the sector. Worthy of mention are blockchains, which permit financial schemes and decentralized certification that have, to some extent, shaken the role of central banks; and artificial intelligence, which gives value to intangible assets, data in particular, allowing them to be used as currency and raw material in the production of goods and services.
Such enormous change, however, must be governed, and for that to happen, the sector must be properly regulated. The generation of rules and policies concerning the use of technologies should make strategic considerations that are the result of risk/opportunity analyses. Indeed, the absence of any or overly lax regulation could potentially produce speculative and/or ethically unsustainable situations. Over-regulation, on the other hand, would discourage useful experimentation and risk losing ground to major international powers where more open and flexible policies make it possible to take more frequent and rapid advantage of technological innovations.
Another topic discussed was the application of legislation. A recent ruling by the Polish Constitutional Court establishing the sovereignty of national legislation over European law, and the PSD2, which has been applied differently in all Union member countries, are elements that point to the need for adequate instruments by which to enforce compliance with rules before they are drafted. It also prompts reflection on the fact that a one-size-fits-all regulation cannot work with a dynamic and variegated financial market such as Europe’s. An initial step in this direction would be to unify European financial markets and banking systems, but despite this having been acknowledged as fundamental by all concerned, this seems to remain a remote possibility.
The European Union’s attempts to stimulate innovation, among which the PSD2 and everything that falls within the broad definition of open-banking, have seen to it that not only do the challenger-players of the financial and banking industry come from both inside and outside the industry, but they have also triggered a radical change in user behavior vis-a-vis financial markets. For example, today’s users can, and often do, choose to invest in extra-banking products, such as crypto-assets, and base their trust in operators on the quality of their experience as customers. To nurture that experience of quality and offer services calibrated to user needs and expectations, the banks of tomorrow are going to have to embrace innovation and begin to resemble tech companies in terms of management model. Traditional banks have been hard put to achieve that outcome thus far: only one in three has at least one Board of Directors member with tech industry experience.
Financial institutions, which are currently shifting in a customer-centric direction in which users and their experiences form the centerpiece of growth and management strategies, must not neglect sustainability. This means attention to the environment and society in which the end-user lives. Addressing environmental concerns is certainly urgent, but it is also simple: the classification of problems and identification of solutions – the simplest of which is to tax the polluters – have already been amply confronted. Instead, there are fewer taxonomies for social problems and concrete solutions are increasingly difficult to identify, not least in consideration of the fact that some social values are entirely non-negotiable. Certainly, an initial approach could depart from more diffuse economic/financial training with a view to ensuring citizens develop an awareness of finance as a true resource.