The intense transformation experienced by the Spanish banking sector can be summed up in three key points: greater capitalisation (the average in the CECA sector at the close of 2015 is 12.86%); greater consolidation (savings banks and banks created by them have tripled their average size since 2008); and lower installed capacity (with the number of branches being reduced by almost 40% and employees by more than 36%). These figures highlight the intense preparation of the Spanish banking system for the challenge posed by the European Banking Union (in contrast to the financial systems of some of our neighbouring countries, which in no way match the transformation and restructuring efforts undertaken by our system).

The old slogan of creating a single banking market is now closer than ever to becoming a reality. The Monetary Union, the intense harmonisation process promoted by the European Commission, the regulatory activity of the European supervisory authorities and, finally, the Banking Union have ended up shaping a framework shared by all European financial institutions which, consequently, face common problems and challenges. While these are many, the most notable can be summarised in three: profitability, digitalisation, reputation.

The return to more satisfactory levels of profitability is the main challenge for the European banking system. The current low interest rate environment, with no prospect for change in the short term and coupled with a slow economic recovery, is not the most favourable context for business. Therefore, in addition to the usual recipes of cost containment, it is essential to find alternative solutions. And in this respect, we are beginning to see an interesting redesign of the commercial offer on the part of financial institutions, in favour of new products and services that allow them to achieve a higher level of customer loyalty. In short, an adequate diversification of the offer, which allows for an equivalent diversification of income, is essential to overcome this difficult phase in terms of profitability. Banks will tend to redress the balance between net interest income and fees and commissions in order to give more weight to the latter in their income statements.

Digital transformation is another major challenge. New technologies and big data present opportunities to get closer to customers and offer them a more personal, satisfying and cost-effective service. But above all, digitalisation is the necessary response to customers' new habits and demands: multi-channel relationship and the highest demands in terms of service quality. The real impact of the technological innovation process on the banking business remains to be seen. But one thing is certain: that financial institutions are called upon to combine traditional and digital banking tools. This is the only way to build a competitive banking model. In this combination of traditional and digital channels, branches will survive, but only to the extent that they can operate as enhanced service centres, geared towards high quality advice for customers.

Finally, the financial sector faces the challenge of regaining its reputation and prestige as an industry. CECA's member entities have proven their contribution to the economic recovery through a sustained reactivation of new credit granted to the real economy, especially households and SMEs. But also through the more than 700 million invested in Obra Social in 2015. Both are valuable assets, with unquestionable social value, on which to establish the certainty that the banking system is a key element for economic development and the generation of well-being.