23.06.17  “The challenges facing the Spanish banking industry” Closing address to the seminar “La Cuarta revolución. ¿Cómo afecta la agenda digital a la economía y a la industria?” (“The fourth revolution. How does the digital agenda affect the economy and industry?”, UIMP – APIE (Santander) Javier Alonso Deputy Governor  Good morning. It is a pleasure to be here in Santander today, at the Universidad Internacional Menéndez Pelayo, continuing the tradition for the Deputy Governor of the Banco de España to participate in the closing session of this seminar. Thank you to the University, to its Rector, to the APIE (Association of Economics Journalists) and, in particular, to Miguel Ángel Noceda, for organising this event and for his kind invitation. This year, the focus of the seminar is technological developments and, in particular, the socalled “digital agenda”. This gives me the opportunity to speak about one of the main challenges facing the banking industry (new technologies and the entry into the banking market of what are known as “fintech” companies). However, I do not wish to overlook other important challenges for the industry, such as its profitability, compliance with the new regulatory requirements (in particular on resolution) and the need to maintain customer confidence: the most important and fragile of bank assets and the fundamental basis of banking activity. 1 The Spanish banking industry In order to clarify the background, before addressing the challenges, allow me to briefly describe some of the main features of developments in the Spanish banking industry as a whole.

In adapting to changing economic environment, businesses must have in place adequate risk management and protection. This is key to ensure business sustainability. Takaful operators offer a wide range of commercial protection schemes to help businesses build its risk management. These include protection against risks associated with natural disaster, weatherrelated events, payment default, professional indemnity and damage in crops, among others. For example, trade credit takaful solution to be launched in 2020 complements the wide range of trade finance solutions for importers and exporters that transact on an open account basis. Islamic finance is a natural fit for halalan-toyyiban Let me now move on to the final component – the underlying strength which ties the halal opportunity with Islamic finance – synergy. At the national level, the government supports and recognises the role of Islamic finance as an important tool to develop and grow businesses and SMEs. In the 2019 Budget, the SME Shariah-Compliant Financing Scheme was established to strengthen the development of SMEs. Under the Scheme, the government has committed to subsidise 2 percent of profit rate or borrowing cost for total financing worth RM1.0 billion. A number of other strategies are also being pursued to better position Islamic finance solutions to meet the needs of halal businesses. The industry players have participated in mega events such as Halal Expo 2019, Halfest 2019, and Festival Islam dan Halal Antarabangsa Johor Darul Ta’zim 2/3  BIS central bankers' speeches  2019 to create awareness on its offerings.