BPFI National Conference 2019: Delivering for the Customer – Welcome Address from Gavin Kelly, BPFI President

Thank you Vincent; and good morning Ladies and Gentlemen

As President of Banking & Payments Federation Ireland it is my pleasure to welcome you all to this morning’s conference.

This year’s theme of ‘Delivering for the Customer’ affords us the opportunity to consider how we can best meet the needs of the customer in an ever-changing marketplace.

In reality, no one financial services firm can claim to have the complete or perfect answer to this.  The manner in which banks and other providers differ in their approach is confirmation that it’s certainly not a case of ‘one size fits all’.

It’s all of 25 years since Bill Gates famously stated “Banking is necessary, banks are not”.  It’s no surprise to hear that I disagree with the latter part of his sentiment; and developments since then have proven him wrong.  Perhaps what he really meant was ‘banks in their then current form’, in which case there is some substance to his assertion.

We have witnessed huge transformation over the last 25 years in how retail banking services are delivered to customers.

Crucially, this transformation has been driven by customer preferences and demand. That’s set to continue.  Let’s look briefly at some trends which illustrate this.

  • The number of licensed credit institutions in the EU-28 member states fell by some 29% between 2008 and 2018. Germany and Italy experienced the largest contractions in absolute terms, but we’ve also seen our fair share of contraction here.
  • The number of branches across the EU 28 has fallen by 27% over the same period – and again we have not been immune to this trend.
  • At the same time there’s been huge growth in digital banking and contactless payments. For example:
    • Irish consumers made over 48 million credit transfer transactions through their online banking services during the second half of 2018, an increase of almost 50% since the second half of 2014.  Taking a wider view, over broadly the same period the number of digital interactions, including customers checking their online account balance, has seen a four-fold increase.
    • Some 364 million contactless payments were made here during 2018 – that’s almost one million per day and represents growth of 63% in one year alone.

It’s clear from these trends that any bank or financial service provider which does not embrace technology to meet customer expectations will struggle to remain relevant.

All providers – from traditional banks to digital banks, fintechs to big techs and other non-financial platform companies – are each developing their own strategy and approach to market.

For more traditional banks like my own, and indeed banks generally in Ireland, this has not led to our abandoning the branch as part of the delivery infrastructure.

Rather, it has meant consolidation in branch numbers and reconfiguration of the role of the branch as an important element in our range of service delivery channels.

The branch also provides a presence in communities and is a way of reinforcing trust.

This could well explain why, while primarily focusing on digital platforms, a number of challenger banks have also embarked on opening  branches.

And who knows what other new trends are to come… I note that Clydesdale and Yorkshire Bank has decided to deploy bankers as trained baristas in their B digital brand.

Mention of trust brings me finally to the issue of culture in banking.

We know full well that we have a great deal of work to do to rebuild the trust of our customers and other stakeholders; and to do that we need to build a culture which delivers fair outcomes for those customers and stakeholders.

Speaking for my own bank I can say that we have embarked on an extensive programme of work in that area; and I believe that other banks are committed to doing something similar.

At industry-level we fully support the work of the independent Irish Banking Culture Board, as we do the work of the Central Bank in developing a more robust corporate governance framework – including a Senior Executive Accountability Regime.

In working with these key stakeholders, we will at the same time be keen to ensure that, in the words of our Chief Executive, Brian Hayes, “we will be careful not to instil a culture of blame”.

I’m sure that the issues that I have briefly touched upon will come up in the various discussions this morning.

Indeed, we’re very fortunate to have with us an array of leading speakers and panellists from home and abroad to give their perspective on our conference themes.

The room is looking forward to hearing them and I want to strongly encourage you to engage with the discussion and ask questions.

In conclusion, I would like to thank our sponsors – Accenture – whose valuable support yet again makes this event possible.

Thank you for your attention and I now hand you back to Vincent.

BPFI and Insurance Ireland St. Patrick’s Day Event

Pictured L-R: Florian Wimber, Insurance Ireland; Ambassador Declan Kelleher, Permanent Representative of Ireland to the EU; Niamh O’Donnellan, BPFI
Pictured L-R: Brian Hayes MEP; Maurice Crowley, BPFI; Ashley Fox MEP; Seán Kelly MEP
Ted Hart, Legal & General; Eve Finn, Legal & General; Barry Andrews Fianna Fáil; Niamh O’Donnellan, BPFI; Helena Walsh, Cicero
Maria Walsh, Fine Gael, Niamh O’Donnellan, BPFI; Florian Wimber, Insurance Ireland

BPFI hosts conference on “Anchoring Good Culture, Ethics and Compliance in Banking”

L-R: Ciaran Walker, Eversheds Sutherland; Judge John Hedigan, Irish Banking Culture Board; Saumya Bhavsar, Credit Suisse; Maurice Crowley, BPFI

BPFI’s “Anchoring Good Culture, Ethics and Compliance in Banking” conference attracted close on 200 delegates – a reflection of the level of interest and intent across the sector.

Attendees received very useful insights from a range of speakers: this included presentations from Credit Suisse (Saumya Bhavsar and Tamlyn Ludford) and from Lloyds Banking Group UK (Sue Tomblin) on how they have set about embedding a better culture across the institution.  The conference was also addressed by David Rodin, from Principia, Justice John Hedigan, who recently appointed first Chairman of the new, independent Irish Banking Culture Board; by Ciaran Walker from the legal firm Eversheds Sutherland as well as by Julie Pardy from Worksmart UK who spoke about senior executive accountability.

A number of common themes as follows were notable across the range of presentations and contributions:

  • A ‘one size fits all’ approach to embedding good culture will not work; instead different banks will likely need to go about this in different ways
  • Culture sits everywhere and nowhere at the same time – no one person or section within the bank owns it, it’s everybody’s responsibility
  • Having an agreed common purpose is a very strong motivator to driving good culture
  • Culture cannot be changed by changing rules, change must come from within the bank
  • Culture change requires considerable collective effort and time – likely to be up to two years before the first signs of behavioural change become apparent.

FIBI Conference

The 2017 FIBI conference, “International Banking: The New Normal” was held in June, with support from members and sponsors KPMG and Matheson. While Brexit was a recurring theme at the conference, a number of speakers, including Michael O’Sullivan of Credit Suisse, emphasised the importance of remaining alert to other issues and of not becoming fixated on this one issue. Kieran Donoghue of IDA Ireland expressed confidence that the Republic will secure a number of wins as his organisation “aggressively” pursues the opportunity to lure financial activity from London post-Brexit. Additional topics discussed included navigating the regulatory landscape and the importance of working with Fintechs, with new technology and Fintechs in particular being a key focus of FIBI going forward.

If you would like further information on this item please contact:
Gavin Purtill, Head of Capital Markets at gavin.purtill@bpfi.ie

Non-Performing Loans (NPLs)

Non-Performing Loans (NPLs) continue to dominate many discussions at EU level. Most recently, the Economic and Monetary Affairs Committee held a public hearing with the Chair of the Supervisory Board, Danièle Nouy, where Brian Hayes MEP asked Nouy about the definition of NPLs and whether the Single Supervisory Mechanism (SSM) sees the difference between NPLs that are treatable and those that are not. Nouy responded that all NPLs are indeed different depending on whether they relate to corporates/SMEs/mortgages and that the SSM is working in Joint Supervisory Teams (JSTs) to assess bank plans. More generally, Nouy stated that the SSM is also looking into more “forward-looking solutions” to avoid build-up of NPLs in future and that it wants supervisors to have sufficient powers to ensure that banks make timely prudential provisions for losses resulting from NPLs. Meanwhile, the European Commission published an Inception Impact Assessment which outlines its intention around a legislative initiative which could further the development of secondary markets by alleviating impediments constraining the sale and transfer of both direct and indirect loans. A legislative proposal is expected in early 2018. Later in July, Finance Ministers will discuss the NPL situation in Europe along with possible additional actions that could be taken.

If you would like further information on this item please contact:
Niamh O’Donnellan, Head of EU Affairs at niamh.odonnellan@bpfi.ie


The terms of reference agreed for the Brexit negotiations following the first meeting of the EU and UK negotiators in June were largely symbolic and did not look at substance. They set out the key principles and processes for the negotiations, establishing five four-week negotiation rounds between now and October, which is the target conclusion date for the first phase of negotiations. The first phase involves looking at citizen’s rights, the financial settlement and at borders/Ireland, while the second phase will look at the future arrangement. Both sides have published their positions on the rights of citizens, which are not too far apart, and both try to protect the Common Travel Area between Ireland and the UK. More generally, the Northern Ireland  border issue will be discussed in a “dialogue” between the EU and UK negotiators over the summer. Technical proposals may be forthcoming in the autumn, however there is no expectation of finalising arrangements until the future arrangement with the UK is finalised. The next negotiating round will take place on 17 July. 

If you would like further information on this item please contact:
Niamh O’Donnellan, Head of EU Affairs at niamh.odonnellan@bpfi.ie

Central Bank Consultation on Competent Authority Options and Discretions

The Central Bank of Ireland (CBI) has published a consultation paper outlining its proposed requirements and guidance in relation to the implementation of certain competent authority options and discretions (O&Ds) arising under

  • the European Union (Capital Requirements) Regulations 2014 (‘the CRD Regulations), transposing Directive 2013/36/EU (CRD IV);
  • Regulation (EU) No. 575/2013 (CRR); and;
  • Commission Delegated Regulation (EU) No 2015/61 (the ‘LCR Regulation’).

This consultation applies to options and discretions under a number of areas including Own Funds, Credit Risk – Standardised Approach, Liquidity, Corporate Governance, Pillar 3 and MiFID Firms. The consultation period ends on 4 August and we have requested initial feedback from the relevant working groups.

If you would like further information on this item please contact:
Amy Walsh, Head of Risk and Regulation at amy.walsh@bpfi.ie

European Supervisory Authorities (ESAs)

The European Commission is set to announce changes to the functioning of the European Supervisory Authorities (ESAs) in Q3 2017, including a much stronger role for the European Securities and Markets Authority (ESMA) as a capital markets supervisor following the conclusion of a recent public consultation. Additionally, the EU27 Heads of State should make a decision on the relocation of the European Banking Authority (EBA) in October, having agreed the criteria for the relocation in late June, and with the formal bidding process closing at the end of July. The Commission will give an assessment of each bid/offer and three voting rounds will take place. Ireland has submitted a bid and while expectations are not high, the understanding is that neither France nor Germany will allow the EBA be housed in either of those respective member states so it must go somewhere else.

In June, then Finance Minister Michel Noonan published a brochure promoting Dublin as the new location for the EBA. Speaking at the launch of this document, the Minister said, “We strongly believe that relocation to Dublin is the best option for the important work of the EBA and the least disruptive location for EBA staff. The publication of this document will keep Dublin high on the list of those cities that want to be considered for the relocation of the EBA.” Significant lobbying and diplomatic discussions at the highest levels will be ongoing between the Irish Government and other EU Member States in advance of the final decision.

If you would like further information on this item please contact:
Niamh O’Donnellan, Head of EU Affairs at niamh.odonnellan@bpfi.ie

Central Bank  Consultation  on  investment framework for credit unions

BPFI has submitted a response to the Central Bank of Ireland’s (CBI) consultation paper to consult on potential changes to the investment framework for credit unions. The consultation paper is proposing that credit unions would not be permitted to invest in subordinated debt instruments that are eligible for MREL, setting out that this is due to their risk profile and the potential implications for credit unions should the institution that issued the instrument enter into resolution. Based on this, the CBI is proposing amending the definition of bank bonds in the 2016 Regulations to clarify that bonds that are subordinated to any senior bonds issued by a credit institution, do not fall within the definition of ‘bank bonds’ set out in the investment regulations. This will have an impact on financial institutions, who will be issuing senior unsecured debt via Holdcos as a result of the Bank Recovery and Resolution Directive (BRRD), as based on the proposed guidelines these bonds will not be compliant. BPFI commented on a number of issues and pointed out that it is crucial that, if restrictions on investments of bank bonds are introduced,  a clear, consistent application of restricted investment is applied irrespective of the form of subordination, i.e. Statutory, Structural or Contractual.

If you would like further information on this item please contact:
Amy Walsh, Head of Risk and Regulation at amy.walsh@bpfi.ie

Capital Markets Union (CMU)

In early June the European Commission published its long-awaited mid-term review of the Capital Markets Union (CMU) agenda – a major political priority when the mandate of this Commission began in 2014. The Commission is now at the half-way point in its term, with the mid-term review offering a reflection on the progress made and work still to do to develop CMU in Europe. Post Brexit, a CMU is more important than ever, and the EU has reached political agreement on a new Simple, Transparent and Standardised Securitisation Framework, as well as revising rules to widen the reach of the EU framework on venture capital. Going forward we expect the Commission to focus on greater supervisory convergence in capital markets with an enhanced role for the European Securities and Markets Authority (ESMA). Specifically, we expect consideration in the next 6-12 months to be given to a review of the prudential treatment of investment firms, the cross-border distribution of funds, the development of secondary markets for NPLs, a possible framework for EU licensing and passporting for Fintech, action on sustainable finance and work on corporate bond market liquidity. Short-term priorities relate to an EU Framework for Covered Bonds, legislation on cross-border securities ownership and the development of a Pan-European Personal Pension Product.

If you would like further information on this item please contact:
Niamh O’Donnellan, Head of EU Affairs at niamh.odonnellan@bpfi.ie