Alberto García-Lluis Interview with Valencia Strategic Consultant for Digital Transformation (EDE) in the financial sector and expert in business development. Radiography of the bank's situation and its future. Blockchain technology goes beyond the impact on banks. Time will give him reason.

Question: Why do digital coins from central banks appear?

Answer: There are many variables and interests, both of which stand out above the others. The first is the response to a bank business model, which is not effective because the return on capital is lower than the cost of capital. Maintains commissions and service charges for customer deposit management. This situation opens the door for new competitors, who can offer more competitive services without having to manage customer deposits.

It is important to understand that money ceases to be a commodity (paper currency) and becomes a business solution. Digital money is easily integrated into new processes and technological tools that accelerate business opportunities in an increasingly international market. The opportunity to program money will make it a strategic resource for international trade. The central banks understand that the digital money issued by them is a very valuable tool to defend the interests of international trade, markets and trade. As well as providing value to business goods and services.

The Central Bank (CBDC) Digital Currency will bring a major change in the banking structure and business model. We are already seeing some international projects. The bank has made the future dependent on digital coins.

Question: How many central banks have digital coins?

Answer: According to a recent report by the Bank for International Settlements (BIS) (2019), about 70% of central banks are in the process of developing their digital currency (CBDC). They are in different stages. Uruguay, Canada, the Western Caribbean Union, China and others are in the testing phase.

Question: What changes will it bring to the wider public?

Answer: It depends largely on the amount of e-money that central banks make. If that money were available to society, it would lead to two major changes. The money would once again be subject to the sovereignty of the owners and would be managed through the wallet. This would lead to the disappearance of bank deposits. It would end a banking business model; it is essentially based on commissions, and service charges, for maintaining customer deposits.

The second major change would be to move to new pay patterns, and accelerate new business and business operations. This would lead to lower prices and greater competitiveness of goods and services. This will help the consumer and accelerate the company in the process of digital transformation to compete with new rules in international markets.

Question: What changes will financial institutions bring?

Answer: I have been working for over a year on how to change the banking business model. At first we didn't know if the transformation would be of interest to financial institutions. We have drawn two key conclusions.

It will affect profound change in the business model of commercial banking and investment banking. Both will need to change their organizations to a new business model so that they are profitable without managing customer deposits. A transitional process should be defined to convert financial institutions into electronic money institutions, in accordance with Directive 2009/110 / EC.

When the bank succeeds in transforming its business model beyond its customer deposit management, it can engage in true financial business. The second change will be great. The bank will be able to provide highly profitable services when released from the costs and risks that govern customer deposit management. New players will be providing financial services, they are already watching. Leading financial institutions will have to endure major structural changes.

The digital transformation of the bank is similar to the digital transformation of the automotive sector with the electric vehicle: the concept does not change, but the mechanics change disruptively.

Question: When will the European Central Bank's digital coin arrive?

Answer: It is very difficult to predict, it will be sooner than we think. It is likely that with this decision, other digital central bank coins will be presented to society. For example, the United States.

The first central banks to issue digital money will determine the benchmark that other central banks will use to make them more competitive.

Spanish entities and banks

Question: Are Spanish financial institutions ready to tackle this change?

Answer: We have just conducted a study on the state of digital transformation processes in the Spanish financial sector. Santander, BBVA and CaixaBank have developed a very interesting strategic positioning. In general, the Spanish bank has better positions than a significant part of the European banks. This makes us optimistic.

The challenges that will be met in the coming years will be crucial in recognizing the leading financial services organizations in Spain, Europe and global markets.

Question: Are financial institutions ready?

Answer: The Bank Deposit Management Sector is a rope that will gently shake, and the only means of survival. I am sure of this paradox. The first bank to develop a new business model out of the loop that understands this and automatically destroys its customer deposit management will succeed in leading the financial sector. That does not depend on size.

The full interview and photo is taken from the blockchaineconomia.es website.