The issue of economic recovery is also linked to the transformations of the local bank, for which the question of innovation becomes crucial. The starting scenario is unfortunately that of too many cases of "bad local bank“, due to the loss of control over risks, costs and, above all, conflicts of interest, the consequences of which on savers fill the news in recent weeks. But we need to go further with awareness and determination, finally breaking the by now inadequate patterns of local banking.
The question of trust is the background to any request for renewal, indeed its relevance increases in contexts of strong change bank/customer relationships, as we shall see further on. We need to view financial innovation from four interdependent viewpoints.
The first is that ofcorporate form innovation of the local bank, with the decisive push given in the last year towards the limited company: directly, in the reform of the cooperative banks, indirectly, i.e. through the parent company spa (or other possible methods) in the ongoing self-reform of the mutual banks, given the greater ability of this configuration to enhance the characteristics of management efficiency.
It is a change, which marks the departure from the culture of the institutional peculiarities of our system, in which we have been immersed for too long and which have become, in comparison with other systems of our competitors, an increasingly less sustainable cost factor. A quarter of a century has passed since the transformation into joint stock companies of the savings banks, then established in the form of associations and foundations, and the benefits have been seen.
The second is that of new regulatory environment European Union, the impact of which exploded with the introduction of the directives on banking crises and on guaranteeing deposits. The topic, innovative and complex, has been, in its evolution, underestimated at a political, institutional and professional level precisely in its effects on the local bank. We must quickly put an end to these uncertainties and regain full sharing of European choices.
This is necessary to focus on the issue, essential for the smaller bank, of the proportionality of supervisory regulation, to avoid that the related costs become a reason for the search for economies of scale more than technology and operational dimension. It would be paradoxical if this instrument were to affect the configuration of the system, which should dutifully be kept pluralistic and market-based. After the too big to fail, we should definitively recognize the too small to torture rule. And it's not just a joke!
The third point is that of industrial renewal of our banking system, not only minor, that is the ability to rebalance the current characteristics of high risk and low yield, at the time of practically zero spreads. The need to reduce the industrial cost of the banking product, in its structural components and typical risks, opens the way towards greater production flexibility in the medium term, with industrial reconfiguration processes based on consolidation and downsizing. This is where, in addition to the question of the bad bank, that of greater specialization comes into play, with the review of the universal bank model.
Remaining with local banks, it is necessary to weave new relationships between retail, private and merchant banking and with new operators such as payment and electronic money institutions, to expand the range of services to be offered to typical customers, with clear rules for sharing the respective know-how -how. It is a disadvantage to further delay the formulation of practicable and coherent industrial plans.
The fourth theme concerns the technological renewal driven by the digital transformation of banking products and services and the related distribution processes, i.e. the ability of even the smallest system to fit along this indefectible trajectory. Today the innovative focus is called digital bank and many large banks are preparing their group digital bank as a strategic choice to enrich the banking business. It is the beginning of a significant change and not the pursuit of transient fashions.
The modification of the traditional banking context is articulated in the complete automation of processes and in the use of web technology, but, more generally, involves the creation of more complex business models, with the aim of better meeting the financial needs of different segments of clientele. By way of example only, by demographic data, wealth, gender, investment prospects, ability to use technology, and so on.
Contrary to what one might think, the digital bank primarily concerns people and secondly technology, declined in its most innovative components of the mobile Internet, social networks, analytics, clouds, apps and the expected diffusion of Internet of things. The evolution towards the digital bank is dictated by the downsizing of the physical networks of the branches and their transformation from places where transactions are carried out into points of sale, in the introduction of fully automated branches, managed remotely, in the offer of integrated services (through multi-channel) in the customer's daily life, and, in perspective, augmented, through the Internet of things. Following these trends, the digital bank aims to obtain, over time, consultancy/assistance functions for its customers, rather than a mere service provider, focusing on reliability, transparency and professionalism of the services.
These traits lead to community building, in which the production and transfer of information intensifies, but above all where the clientele expresses, via network, continuous evaluations on the quality of the services received, with the effect of strengthening or weakening the characteristics of belonging, of identification with the brand, of loyalty. Ultimately, the digital bank is omnicustomer, being based on the experiences it is able to develop in relation to the plurality of its customers, rather than omnichannel, i.e. based on the multiplicity of channels to be made available for operations. As for the services on which the so-called financial technology is addressing, they are essentially savings management and payments, also in the version of basic, safe, low-cost products, also capable of bringing the large number of customers, which have become, over the years of the crisis, without banking relationships.
Process innovation has decisively taken the path of dematerialisation and the implementation of remote procedures, among which the most recent introduction of remote customer identification processes stands out, which have filled a significant step towards the bank's digital transformation. These innovative elements, subject to certain important conditions, can also be used by smaller banks, as they can be managed successfully, precisely by leveraging the customer relationships that have developed, in a proximity position, within real communities. An example to mention is the digital bank promoted by a BCC, with the BCCforWeb brand.
The digital bank allows you to support the birth of Smart Communities, physical and virtual together, whose characteristics must be simplicity and immediacy in the offer of a multiplicity of services. Platforms built according to this approach allow the growth of peer-to-peer relationships, with the possibility of including the local bank. Community apps are a new way of approaching the market and even more limited contexts than those affecting the large platforms are mines of information to be used. Trying to give an example, the local bank could act as a catalyst in accessing commercial circuits or professional assistance platforms for families and businesses and the provision of private or public utility services existing in the area (where the driver is physical proximity).
With respect to the community of the context (for which the driver is the homogeneous interests of the participants), it can support initiatives for the promotion of the image of the territory, through the enhancement of local products, artistic and cultural assets, tourism. These methods can be activated towards catchment areas such as universities, sports federations, consumer associations, fan communities.
The essential contribution of banks to these new forms of social business is given by the possibility of financing the exchange processes on those platforms and of managing the underlying payment circuits, as well as the value redistribution processes, used as an incentive to multiply relationships. The functional characteristics of the Community Apps can be aimed at involving the members and the local commercial ecosystem, increasing the opportunities for the exchange of goods and services between the members of the community with the generation of value based on the so-called Uber model and the diffusion of functions Of mobile payments. An appropriate mix between international circuits and internal payment circuits can represent ways of contrasting the competition of larger operators.
The digital bank also requires organizational changes compared to the traditional bank in terms of operational streamlining, personnel involvement in decision-making processes, multidisciplinarity of the professionals employed and top management awareness in terms of technological knowledge and commitment in the development of customer relationships. The smaller, more agile bank could benefit from less hierarchy of roles and greater flexibility in operating procedures.
In terms of competition, co-planning and cooperation schemes with other intermediaries on issues of common interest can create useful synergies, diluting excessive forms of competition. In any renewal, the weight of tradition must in any case be considered. If over time, through the exercise of traditional activities, the individual bank has taken care of its reputation, it will be easier for it to set up a digital banking activity, always keeping in mind that in this field customer relationships present a high variability of entry and exit. The lever of reputation also gives the local bank the opportunity to expand not only its economic weight, but also its social weight, becoming, in the long term, a credible vehicle for the growth of the population's financial knowledge.
It remains to mention one last topic, even if more technical, in any case connected to the previous ones. Add ramifications, like the digital bank, the traditional bank tree makes sense if there is a strong trunk and, therefore, not only awareness, as mentioned, of the opportunities and risks of this new network business, but also robustness of the underlying technology . It is known that in Italy a significant part of assistance to the activities of local banks is entrusted to outsourcers, to whom relevant functions are outsourced, to the point of being subjected to controls by the banking supervisory authority for a few months (this is also a novelty).
The weight of outsourcing is destined to increase, attracting larger banking intermediaries who have so far insisted on the more expensive on-premise management of their IT resources. In the field of technological infrastructures, we are suffering from delays due to limited investments in recent years and the fragmentation of operators. The direction is that of the redesign of the management applications common to traditional banking and digital banking, such as registry offices, current accounts, deposits, credits, finance, payments according to the as-a-service approach, having a more flexible and modular nature.
In this regard, it is important to evaluate innovative methods in relations with large international hardware and software manufacturers, so that alignment along the frontier of technological innovation takes place according to more structured approaches. This means that outsourcers are increasingly oriented towards the role of service providers, technical, professional, consultancy and specialist assistance for their banking customers, based on the advantages accumulated in terms of knowledge of banking functions, rather than on that of producers of information systems, which, increasingly complex, respond to the logic of industrial production on a much different scale.
The perhaps trivial conclusion of all the foregoing is that if there is no shortage of critical factors and one often has the impression of touching what it means to live in an age of chaos, it is also true that we must be attracted by opportunities that are generated, as they appear more and more clear to our eyes.
