Alberto Aza: “It is important that banking regulation applies to big tech or fintech”

Talking about CECA is to speak of the Spanish Confederation of Savings Banks, which in the first decade of this century aggregated nearly fifty savings banks. However, the 2008 crisis -originating from the subprime issue- triggered a sort of catharsis in the sector, leading to the emergence of the so-called ‘banks of savings banks.’

Currently, CECA is composed of CaixaBank, Kutxabank, Abanca, Unicaja Banco, Ibercaja, Liberbank, Cecabank, and the only two savings banks still in operation: the Valencian Caixa Ontinyent and the Balearic Colonyà Caixa Pollença. The banking foundations of La Caixa, Ibercaja, Kutxa, BBK, Unicaja, Vital, Cajastur, Caja de Extremadura, Caja Cantabria, CajaCanarias, Caja Castilla-La Mancha, Caja de Burgos, and Caja Navarra are also represented. Additionally, foundations such as CajaGranada, Caja Rioja, Montemadrid, Caja de Canarias, Bancaja, Afundación, Pinnae, Caja Inmaculada, Caja Mediterráneo, Ávila, Cajasol, Caja Murcia, Sa Nostra, Caja Segovia, Fundos, Guillen Cifre, and Caja Círculo are included.

But there is nothing better than talking to Alberto Aza, spokesperson for CECA, who kindly answered this newspaper’s call to learn about the present and future of this institution. Below is the conversation:

If a decade ago they had told you that today there would only be two savings banks remaining (Caixa Ontinyent and Colonyà), what would you have thought?

It is true that the scenario has changed greatly in the last decade following a significant process of consolidation and adjustment. However, it should be noted that the entry into force in 2013 of the Law of Savings Banks and Banking Foundations transformed the sector to the extent that it segregated the former savings banks into two entities: on one side, banks to ensure financial services and, on the other, foundations to manage the Social Work. Thus, the functions carried out today by banks and the two savings banks continue to be structured around territorial roots, social responsibility, and retail orientation.

Did you understand that savings banks from another point in Spain would ‘colonize’ other territories?

I believe that the presence of savings banks from a specific area in other territories has not been usual. In my opinion, savings banks have provided a very specialized service in their regions of origin, and that has been the success of many decades of activity.

What importance does the Social Work of banking foundations have?

Enormous. The social work is the raison d’être of the foundations. It is a structured element of society and is fundamental in helping to maintain social cohesion and strengthen the welfare state. In the last five years, CECA’s Social and Community Action investment has been almost €3.8 billion, and in 2020 the figure exceeded €770 million, making CECA’s Social Work the first private social investor in Spain. In my opinion, beyond the figures, which give an idea of the positive impact of Social Work -just last year, over 24 million people benefited from one of the promoted activities-, it is necessary to remember that Social Work is a tool that provides attention and support to the most vulnerable groups. It is a constant, often invisible task, but in many cases serves as an alternative for social groups that, for various reasons, do not have the structures or tools needed to continue progressing.

What is the current state of CECA? CECA is a very consolidated association. We integrate 7 banks and two savings banks and from our position as an association, we defend the interests of our members and promote the mission they perform through their financial activities and their Social Work. We have immense knowledge of the sector, regulation, and other key matters for the development of our members’ businesses, and from this position, we try to add value to the entire sector and society. We are also present internationally through two associations, the European Association of Savings Banks and Retail Banks (ESBG) and the World Savings Banks Institute (WSBI).

How is your relationship with other banking associations such as AEB and UNACC?

The relationship with other associations is good and fluid. In fact, the level of collaboration with the other Spanish banking associations has achieved significant accomplishments in actions taken by credit institutions aimed at mitigating the effects of COVID-19, for instance. We will continue to coordinate our associative actions with them. We are players in the same scenario and, in this sense, I believe that we can all provide different nuances that collectively benefit the sector and, in turn, the entire society, because we cannot forget that the banking sector is essential for the social and economic progress of a country.

Negative rates, hyper-regulation, fintech/big tech competition, continuous provisioning… what else could happen to the banking sector?

Well, it is true that we are facing new challenges, although I do not believe it is something exclusive to the banking sector. The world has changed significantly in recent years. The impact of technology on almost all sectors has represented a tremendous turning point, accelerating profound changes that the banking sector has managed to embrace and take advantage of. Digital banking, for example, proved essential during the pandemic and confinement, and this is not something that develops overnight. The banks and savings banks of CECA have been investing in this transformation for years, which today allows us to reach farther and to more people. And concerning regulation, there is no doubt that it is a very relevant aspect for our business. The banking sector must comply with a series of regulations that ultimately ensure the safety of clients and the entire economy. In this regard, it is important that this regulation also applies to new competitors such as big tech or fintech.

How does banking achieve profitability in these times?

Over the years, banking has learned to adapt to different contexts and environments. In the current moment, with the objective of continuing to generate profitability, adaptation involves, on one hand, efficiency, that is, doing more using strictly necessary resources. This is now much more possible and viable as I mentioned before, due to technology. On the other hand, banks -like any other business- offer services and products that require an investment and incur a cost, and the clients who use these services and products pay a fee. This is true for banking and any other business.

Where will the process of deleveraging that the sector is going through with continuous closures of offices and not a few layoffs stop?

The adjustment in the workforce is closely linked to this paradigm shift I mentioned earlier. This trend of adjustments in the network of offices, which has also been seen in other European countries, responds, in an irreversible way, to a change in consumer habits of clients. Undoubtedly, the crisis arising from COVID-19 has accelerated this trend and also contributes to generating greater efficiencies.

How many banks do you foresee remaining in ten years?

I would prefer not to make assumptions; a decade is a long time.

Will we see branches of Google Bank, Tencent Bank, Microsoft Bank… in Spain?

We will have to see what the future holds. What is certain is that regardless of the presence of new actors, if they provide the same services as traditional financial entities, they should meet the same regulatory requirements.

Will physical money as we know it come to an end?

There is no doubt that the form of payment has changed rapidly in recent years. In addition to the increase in the use of cards, banking has developed other platforms that facilitate payments without the need for cash or cards. The most notable of these is Bizum, the instant mobile-to-mobile payment that Spanish banking promoted in 2016, and although it grew significantly in the following years, it saw a major boost during the pandemic, reaching over 16 million users today. These figures illustrate how our payment habits have transformed. Therefore, we are heading towards a world where cash may continue to exist, but probably not in the same way we have known it until now.

What is your opinion on cryptocurrencies? As with any other asset that involves investments, I think it must be monitored and regulated by the competent authorities to ensure the proper functioning of the financial market.

Will all banks end up charging retailers for deposits?

Banks -like any other business- offer services and products in exchange for remuneration. Just as it is necessary to pay a monthly fee to access an online video platform, accessing financial services and their products entails a cost. Normally, the relationship that clients have with their entity is a differentiating factor in terms of the management of commissions. The greater the relationship, the lower the commissions, in many cases, they are even waived entirely.

Finally, is being a banker currently a high-risk profession?

Certainly, it should not be. Banking, the banker who serves us in our office or through online banking, provides a service without which the economy could not function. Banking is the main source of financing for households and businesses in Spain. Consumer financing is essential to gain access to all kinds of goods and services, from a car, a school course, or new appliances. Without it, it would not be possible to obtain the necessary money for these expenses, with the consequent negative effect on both families and commerce. And for companies, banking is a fundamental pillar, as it is the main source of financing for SMEs, which in Spain represent 99.8% of the productive fabric. Without banks, families and companies seeking financing would have to turn to other figures that do not offer the same guarantees, exposing themselves to liquidity risks, insecurity in data management, or usury.