Sergiu Oprescu, ARB: We need to rebuild trust between banks
Trust between Romanian banks must be rebuilt, according to Sergiu Oprescu, Chairman of the Board of the Romanian Banking Association (ARB). He said the banking system in 2017 should focus primarily on building confidence
This year we should increase customer confidence in the banking system as well as banks' confidence in the clients. We should increase investors' confidence and the banks should trust each other," added Oprescu.
His colleague, Radu Ghetea, honorary president of ARB said that the banks must take as many steps as possible to support the economy and the GDP growth. "We are prepared to face explosive development, as Romania has very good prospects for 2017. The banking system can demonstrate once again its ability and readiness to participate in economic growth," said Ghetea.
In 2017 ARB will focus on the digital agenda, to see what the bottlenecks are in this area and to lift those barriers, said Florin Danescu, executive president of the Romanian Banking Association.
For this year, ARB wants to focus on financial education, digital agenda and bank lending in the economy.
The banking system intends to implement the IFRS 9 system, which, according to Oprescu will affect the banking system, as opposed to the old system (IFRS 39).
"IFRS 9 provides a glimpse into the future," stated Oprescu. "The bank must analyse each loan and make early provisioning at the beginning of the loan, which can result in additional requirements of provisioning and, therefore, additional capital requirements. It is a complex exercise which involves analysing each loan in particular."
The implementation of this new system entails significant costs for banks, which, according to Oprescu, will be reflected in lower margins of profit for the financial institutions.
In his opinion, lending is mainly divided into three segments (SMEs, the loans from European funds, and public-private partnership). He said that all three are "lagging behind" and that banks must propose targets and measures to identify barriers and eliminate them.
Oprescu said that for this year he is expecting to see an acceleration in lending for households, with consumer loans decreasing.
The ARB chief pointed out that last year, non-government loan growth was relatively low, and that 2017 is necessary to establish an effective communication system with customers.
The relationship between banks and customers with difficulties in paying instalments will run under direct negotiation, according to Oprescu, who mentioned that the trend is "direct negotiation between banks and customers."
One of the drivers with the largest impact upon the financial and banking services industry pertains to the development of digital technology, via the development and the adopting of new technologies, the increasing of the Internet′s penetration level, mobile devices and the social media, according to ARB.
Technology development brings about changes in behaviour and in financial and banking services users' requirements: they request services in real-time, 24 hours a day/ seven days a week, mobility, easiness, convenience, transparency, and at the same time safety, security and costs that are as low as possible.
"A new generation of customers has been developing; surveys conducted at global level show that by 2025, about 72 per cent of the globe's population will be made up of the ′millennials′, people born during 1980 - 2000 who use the Internet naturally and who will interact via digital channels with all service providers, including with financial and banking institutions," ARB representatives said.
At European levels, projects aimed at building the digital economy are being rolled out, a major strategic objective of the European Union, relying on three pillars: better access for consumers and companies to digital goods and services across the European Union; creating a level playing field for the development of digital networks and of innovative services; and maximizing the growth potential of the digital economy.
The European Banking Federation - an organization where the Romanian Banking Association is a member - supports the setting up of a single digital market by developing innovative and competitive services that would best answer the requirements of the users of financial and banking services.
"Starting from a survey conducted by the Roland Berger strategic advisory firm regarding a series of regulations whose updating could lead to the acceleration of adopting digital technologies in financial and banking services, the banking community from Romania intends to actively contribute to the updating of the legal and regulatory frameworks governing the banking system in order to eliminate the current barriers hindering the introduction of integral digital processes," according to the same source. "Among the priorities of this project we have: accepting the electronic signature as an alternative variant to the original signature on paper-support for any contract between a bank and a customer, on-line lending and enrolment of customers in the digital environment."
The integration of new technologies into financial and banking services involves complex requirements of information security and risk management. Banking institutions provide protection for customers' data, their personal information and their financial resources and are concerned on an ongoing basis to provide a high level of cyber security, in conformity with best practices and standards at international levels.
Besides the requirements of assuring information security in each credit institution, the banking community - concerned about the risks which could be induced into the systems that provide the financial and banking infrastructure by a component which is not secured enough and by the necessity to grant cyber security across the whole banking system - analyses the timeliness to establish a system for alerts, informing, assessment, and prevention of cyber-attacks across the banking sector of Romania.