BBVA executive board director José Manuel González-Páramo participated in the event marking the 25th anniversary of Spanish regulator CNMV. Before an audience of experts in financial regulation and supervision, he asserted that “BBVA is fully committed to responsible banking” through a “business model based on the principles of integrity, transparency and prudence, which govern all our policies and conduct.”
José Manuel González-Páramo participated in a roundtable discussion on financial literacy, which was moderated by the Deputy Governor of the Bank of Spain, Fernando Restoy, at an event marking the CNMV’s 25th anniversary. The BBVA executive board director’s presentation focused on responsible banking and the role financial literacy plays in society.
Mr. González-Páramo started his speech by pointing out that the financial industry is entering a new era, one shaped by technological and social changes. Banking has lost some of its legitimacy, and society is demanding that banks be more responsible. Regulatory pressure is increasing to protect consumers and the dignity of bankers has been called into question, he added.
In this context, Mr. Gonzalez-Paramo explained that the financial system should be built on three pillars: “adequate regulation, effective supervision and financial institutions with a business model based not only traditional risk-adjusted returns, but also returns adjusted to principles.”
In order to explain this concept further, José Manuel González-Páramo added: “This is a people-centric business model in which banking focuses on the customer, from the time we design a new product until we deliver it to our customers. In fact, our vision is that we are working for a better future for people. In short, “the model is based on strict legal compliance, best practices and long-term value creation for our stakeholders.”
Mr. González-Páramo went on to enumerate BBVA’s responsible banking priorities:
- Promote a transparent, clear and responsible communication (TCR) to ensure that customers always understand the products and services they buy.
- Promote financial literacy.
- Develop products and services with a high social impact.
José Manuel González-Páramo said that managing this model should be led by senior management teams. “In our case, responsible banking is supervised by the Board of Directors and the Responsible Business Committee, chaired by our Chairman”. The main objective of this effort is to “win back society.”
In the second half of this speech, he talked about the vital role financial literacy plays in society. “It helps people and families to make better decisions, based on information. It fosters consistent savers, responsible debtors and helps build a better future for people. Furthermore, it helps people manage their personal finances, improve risk management, promote savings and bolster financial systems.”
BBVA divides its financial literacy initiatives into three groups:
- Education for children from 6 to 14 years old, through programs that focus on values related to using money properly, such as «Future Values», in Spain, Portugal, Mexico and the United States.
- Financial inclusion aimed at segments of society that do not have access to banking services in Latin America.
- Raising awareness about pension plans, with initiatives such as «Mi Jubilación» (My Retirement), in Spain.
José Manuel González-Páramo highlighted that since 2008 BBVA has invested over €40 million in financial literacy programs, benefiting nearly 2.5 million people.
Furthermore, the bank signed an agreement with the OECD to include a section on financial literacy in the PISA report. “Thanks to this study, countries know their respective starting point, which enables them to design their own national financial literacy strategies,” explained the BBVA executive board director.
Finally, José Manuel González-Páramo mentioned some of the challenges the banking industry faces. The first one is to measure the impact of these measures. Another challenge would be to include financial education in financial products. A third objective is to form public-private partnerships that enrich national financial literacy policies.
“Responsible banking is the right way to do banking. Our business model is based on the principles of integrity, transparency and prudence, which governs all our policies and conduct,” added Mr. González-Páramo in his closing remarks. In this regard, “financial education is a collective effort in which financial institutions play a key role.”