17. 11. 2016 challenges facing the retail banking sector remarks at the dinner event organised by the european savings and retail banking group ( esbg ), madrid fernando restoy deputy governor good evening. it is a pleasure to have the opportunity to participate in this event and to address this eminent group of bankers. i am grateful to isidro faine and jose maria mendez for inviting me. i hope that you have now got your breath back and recomposed yourselves after viewing picasso ’ s impressive and to some extent disheartening masterpiece, guernica. you certainly need a strong mind to discuss banking issues nowadays. i imagine that probably much of the agenda of your regular meetings is devoted to exchanging experiences on how financial institutions such as those participating in the european savings and retail banking group ( esbg ) are addressing the current challenges affecting the entire financial sector in the current post - crisis period. allow me to attempt to make a modest contribution to that discussion. i would like to say from the outset that i do not believe that the financial crisis, as such, has challenged any specific business model. we have seen institutions with quite different sizes, governance structures and business orientations failing all around the world. the crisis has affected both investment and commercial banks as well as wholesale and retail businesses. indeed, i would subscribe to the idea that, by and large, the crisis does not provide clear arguments with which to question a particular business model or line of activities, such as retail intermediation, wealth management or investment services. it does however encourage us to analyse whether those banking activities are conducted in a sufficiently efficient way by specific institutions so as to make them profitable. that said, pure european retail banks admittedly face specific challenges in the current environment, which need to be effectively addressed in order to preserve the social function that those institutions provide. let me mention three of the most obvious challenges. first, the low interest rate environment, which is putting heavy pressure on financial margins, particularly for institutions – such as most of those belonging to the esbg - with little investment in securities that could be revalued as rates go down, and with much funding obtained from retail deposits, which impedes a full transmission of very low or negative market rates to funding costs. second, the accumulation of non - performing loans in several regions of the euro zone. this is particularly a challenge for banks, again mostly retail banks, with a significant concentration of exposures in a single country

consumers navigate and compare financial products more efficiently, we are looking into the establishment of an online product aggregator to provide financial consumers with the ability to gather reliable information on a wide range of insurance products and make comparisons on simple products on a single website. a number of issues will need to be addressed to support such an initiative and ensure that meaningful comparisons can be achieved. over the coming months we will be meeting with stakeholders to obtain further views on our aggregator proposals and examine options to move this initiative forward. i have spoken at length this morning about our plans for the industry. in the years ahead, this industry will have an important strategic role in the ongoing transformation agenda that is being pursued for the insurance and takaful sectors. the bank is committed to providing a well - balanced regulatory environment that adequately protects consumers, while encouraging advisers to realise their full potential. we will continue to set a high bar on professional integrity and quality of advice, and we welcome your ideas and input on how we can continue to encourage firms to grow within the industry and bring financial advisory services to a wider spectrum of the public. the association of financial advisers has a very important role in this process and has been a focal point for the bank ’ s engagements with the industry. i look forward to your continued cooperation in achieving our shared goal of developing a financial advisory industry in malaysia that truly serves to improve the well - being of financial consumers in this more challenging environment, and one that we can all be proud of. thank you very much for your attention. bis central bankers ’ speeches