What do you think are the main elements and drivers that are impacting the financial system, within the context we are currently experiencing?
The main drivers that are impacting and will impact both new loans and existing portfolios are persistent uncertainty in macroeconomic forecasts and changing customer behavior-. All this adds to an already complex environment of long-negative interest rates. Banks, however, at this stage, play a crucial role in holding the system together. They are called upon to provide the necessary liquidity to the real economy.
The consequences, on the lending side, will consist of a phase of wait-and-see and a decline in initial demand, which will then lead to a gradual increase in demand.
In fact, during the lockdown, we could see a collapse in the number of applications (-40% on loans to individuals), which are now having a slow recovery, and a deterioration in portfolio quality performance, which will lead to a deterioration of the same. Such deterioration has historically been seen on portfolios of loans to individuals with a time lag with respect to the deterioration of macroeconomic fundamentals (in particular, GDP) quite prolonged (about 2-3 quarters) demonstrating how the Italian market has very strong resources of private savings.
In this case, however, what we are experiencing is a macroeconomic shock and therefore the effects will be more significant and, above all, closer together net of the many government initiatives to support the consumer (e.g., moratoria).
In terms of customer behavior, however, we are seeing a significant shift toward more digital preferences (+20%) that is forcing many players to invest in digitization and cyber security.
One last issue I would like to highlight, which is not minor, is customer support measures. What this crisis has that is different from previous financial crises is the banks' focus on customer caring. This comes both from the lessons of the 2008 financial crisis in which the consumer completely lost confidence in the banking system. Therefore, this crisis becomes a great opportunity for the entire banking system to redeem itself.
On the topic of digital, we have been able to observe an acceleration given by forced smart working that has shifted the focus of banks both on their internal employees and on strategic investments directed outward. Within the vision you just highlighted for us, in which consumer preference has shifted to digital, do you expect that when the crisis period is over, will everything go back to the way it was before or will there be changes?
I think, in that case, the contingency in place was a boost. The lockdown contingency, which meant that people could not physically go to bank tellers, significantly and for many permanently changed consumer-bank interaction preferences and modes.d. This will be a strength for those banks, including ours, that have been investing in all-digital processes for some time and now have a significant competitive advantage.
On the lending side, it is emerging how banks are developing 360-degree strategies. In addition to traditional evolved financial products, some institutions have implemented strategies related to non-financial products. Do you think this may be a trend that will affect banks in the long run as well?
It is hard to imagine that non-financial products will be considered core. However, they can certainly contribute to a strategy of customer caring toward the customer while also generating a strong positive brand impact.
During this period the way you work has changed, and this is probably prompting you to review your internal processes and dynamics. What impact has this had on your figure and structure?
Working remotely necessarily required reviewing and strengthening some internal processes, as well as a radical change in the managerial mindset. There was no smooth transition; great adaptability was required.