Annual Retail Banking Conference 18 th June Speech by Anthony Browne. Thank you for joining us at the BBA s Annual Retail Banking Conference

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1 Annual Retail Banking Conference 18 th June 2015 Speech by Anthony Browne Ladies and gentlemen Thank you for joining us at the BBA s Annual Retail Banking Conference Last week we heard from the Chancellor and the Governor of the Bank of England about how the wholesale markets are changing Today, I want to focus on retail banking Retail banking is the shop front for our industry From personal customers, to start-ups, to politicians and regulators All of us interact with our banks primarily as a retail customer. The industry provides more than 140 million bank accounts to customers across all the nations of our country 185 billion was lent to 1.3 million homeowners last year And almost 250 billion in personal savings is held in Cash ISAs. But it is not just about the banking services the industry provides The contribution our industry makes to the economy is also key Our industry pays more than 20 billion in tax And employs more than 400,000 people across the country From Perth to Plymouth The bank brands we see on our high streets Are one of the most familiar parts of British national life But retail banking is changing Indeed, it is undergoing an unprecedented revolution It is changing on almost every front There is The change in technology, being driven by our customers

2 There are changing players in the industry, with more new banks entering the fray And there is changing regulation to meet the needs of customers It is this change I want to focus on today This conference offers an opportunity To share ideas and experience To talk about what our industry will look in another five years time. DIGITAL CHANGE I am confident that almost every one of us here today Has a bank in their pocket New research published today by CACI for the BBA shows that the mobile phone app has transformed the way we bank. Five years ago, mobile phone banking was virtually unknown. It is now the most popular way to do banking in the UK, having overtaken internet banking, telephone banking and visiting your branch Customers will use mobile devices to check their current account more than 890 million times in But as banking changes, it s important to make sure that no one is left behind As the CACI report shows, banking has become more accessible than ever before As an industry we cannot just let this transformation happen to us We must embrace change and make sure it benefits everyone 2 We need to have a conversation about what we want retail banking to look like in the future And some of it might be barely imagineable now Because mobile phone banking is only part of the digital revolution The UK has become an international centre for FinTech The market is currently estimated to be worth around 20 billion in annual revenue The banking industry shouldn t see this fast growing sector as a threat but as an opportunity

3 3 An opportunity to develop new, previously unimagined services for customers to help us all use our money more effectively Perhaps your bank could help you pay less for your heating Or suggest a cheaper car insurance deal when your renewal comes round As an industry we hold an incredible amount of information about our customers And we shouldn t be afraid of talking to our customers about how they want to use this data to ultimately help them save money Done in the right way, this could be a great way for banks to rebuild the trust and confidence customers have in them. This is about innovating and evolving to provide customers with the services they want The industry is being led by customer demand As a former news man I have seen this consumer led drive for more and better information before The amount of news we can all access has grown exponentially over the last two decades First 24 hour news Then blogs, online only newspaper content and ultimately the thousands of 140 character tweets sent by journalists every single day Consumers are choosing to access more and different information from their banks As our report World of Change published this week shows There are nearly 10 million daily log ins for internet banking One member recently told me that the average number of times a customer logs into their app is 28 times a month, not far off once a day 1.3 million text alerts are sent by banks to their customers every single day. I am not saying that innovation is without risk Many of you know Omar Ali, EY s UK Banking and Capital Markets Leader who will be joining us later today to speak about the importance of ensuring the next wave of digital innovation is right for the customer. We need to think not just about the new services on offer

4 But also who will be offering those services banks, challenger banks, supermarkets, new digital disrupters? 4 COMPETITION CHANGE Later today, we ll focus on the new challengers With more than 20 new applications for banking licences, these new players are helping to strengthen competition in the market New names, new faces, and new business structures Each with a fresh approach and ideas All with the customer at the forefront of their minds None of this innovation would be possible without investment This morning we ll hear from Justin Bisseker from Schroders and Michael Helsby from Bank of America Merrill Lynch Who will tell us more about the runners and riders in the banking market REGULATION CHANGE Competition is changing, and so is regulation. Ringfencing of retail banks is coming in by There are more competition reviews than the fingers on my hand, and they will no doubt come up with some more reforms The FCA has been granted new powers to protect consumers, and to promote innovation in payments. But should regulation look like in the digital future? It needs to protect customers and promote financial stability, without strangling competition or innovation. And it needs to do that while supporting the battle against financial crime. There needs to be a level playing field to ensure customers have the same protection whether they deal with a bank or a non-bank. Regulation needs to be future-proofed, keeping pace with technological developments and rapidly changing business models. No small task!

5 But I am pleased to say the conversation is starting to happen 5 Initiatives such as the FCA Project Innovate and the proposed regulatory sandbox are helping promote innovation whilst ensuring these objectives are met The government also needs to ensure that everyone has access to digital services London s average download speed is ranked 26 th out of 30 other European capitals 25% of the UK still does not have access to Superfast Broadband It is vital that the Government prioritise the rapid roll out of broadband, 4G and 5G infrastructure Particularly in areas where consumers and SMEs currently experience digital exclusion. Over half a million adults have limited internet access we already know that more than two thirds of these people would use online banking if they could. The BBA will be pushing government to ensure that everyone has the digital access they need to access the services they want. Reform and regulation isn t just about how the financial services industry deals with innovation Professional standards and conduct are key issues for the industry as the sector works to resolve its mistakes and ensure they never happen again. We need to restore trust by making misconduct a thing of the past. The new Banking Standards Board has been charged with raising standards in the industry. We will be hearing about how they plan to do that from its chief executive Alison Cottrell. The Financial Ombudsman Caroline Wayman will give her views on what conduct in the industry should look like in the future [Concluding remarks] We ve already seen amazing innovation in our sector And more is emerging every year Video conferencing, which has the power to bring a mortgage adviser to your living room in the Outer Hebrides Wearable technology such as wristbands that make online banking safer by confirming your identity with your heartbeat Paying a friend for yesterday s lunch with a simple tap on your smart phone.

6 6 But it s not just technology Banks closing on a Sunday and shutting shop at 5.00pm during the week are increasingly becoming a thing of the past Banks have listened to their customers And are now open for longer than ever before We are even seeing banks open their doors on Bank Holidays. More than a quarter of bank branches have been refurbished in the past three years There are also more places than ever before to carry out face to face banking Our industry s agreement with the Post Office means that there is now a network of over 20,000 places where customers can bank. 99% of people live within three miles of a place where they can withdraw cash, pay in a cheque or set up a direct debt I have spoken about just a few ways the industry has changed And I am sure we will hear many more examples and some of the challenges throughout today The way we bank is changing and for the better. All those millions of us who have signed up for mobile banking have done it because we find it easy, fast and convenient However, that does not mean banks can be complacent that all innovation of this kind serves everyone well That s why banks must strive to make sure that this is not change for change s sake But that the new technologies genuinely improve the lives of those who matter most the customers I d like to thank you all for coming to our conference today And I d like to give special thanks to our sponsors, EY