ECONOMIC AND REGULATORY ISSUES
How to continue growing while adapting to the current economic, monetary and regulatory environment?
CHALLENGES
With moderate global growth in 2019, long-term low (or even negative) interest rates and the emergence of new competitors, the banking industry has been profoundly impacted. In addition to these changes, there is an increasing complexity of regulations characterised by higher capital requirements. This is contributing to the creation of an uneven competitive playing field, particularly between Europe and the United States. Similarly, the environment in which European banks are operating is marked by considerable uncertainty linked, for example, to the effects of the Covid-19 crisis, environmental issues, the rise of protectionism and the United Kingdom leaving the European Union.
By supporting their customers’ projects, banks are at the heart of economic growth and play an essential role in supporting corporate clients, particularly in times of crisis. To fulfil this mission and support customers over the long term while guaranteeing adherence to the highest standards of ethics and compliance, banks must continue to improve their operational efficiency and develop new drivers of growth. As seen in the past, when faced with an unfavourable economic situation or crisis, the European banking industry benefits from the scale and capacity to manage both investments and costs while at the same time adopting some of the most advanced innovations
ISSUES
KEY ISSUES
Macroeconomic environment
Risk of financial instability linked to monetary policies, systemic risks related to increased levels of indebtedness, uncertainty due to political and geopolitical issues and the potential economic effects of environmental and health risks.
Laws and regulations applicable to financial institutions
Risk related to non-compliance with prevailing laws and regulations, regulatory inflation and distortion of competition.
Risk of reduction of international trade from protectionist measures
Trade disputes between the United States and China, for example, are likely to hinder global growth.
EMERGING ISSUES
Evolving regulatory environments
Growing complexity and disparities in international regulations, especially in terms of investments. New regulations for digital technologies.
RESPONSES
Activate the drivers of transformation
Thanks to its diversified and integrated business model, BNP Paribas is able to activate strong drivers of change by improving operational efficiency for instance. This is facilitated by close working relationships among the Group’s business lines and also enhanced by cooperation with others, such as startups and fintechs.
Develop new services to generate additional income
The diversity of BNP Paribas’ businesses and the Group’s geographic footprint (71 countries and territories) facilitates the development of new growth drivers, including more comprehensive services, the development of new partnerships and the strengthening of customer franchises (see page 38).
Diversify customer solutions
Recent digital regulations help the development of new banking and insurance models and enrich the products and services we can provide to customers. ‘Open Banking’ and the development of a platform-based economy throughout the Group are examples (see pages 28 to 30).
Continuously improve ethical commercial practices
As our business activities continue to grow, we also continue to strengthen our ethics and compliance culture. It is the essential foundation of the trust that our customers and partners place in us