“On too many issues the Central Bank has had to push too many retail banks too hard and over too long to put customers first” - Deputy Governor, Ed Sibley

• Retail banks’ behaviours are not always consistent with their stated aims of rebuilding trust and relationships with their customers.
• Delivery for customers requires financially and operationally resilient banks.
• Substantial investment is required in Irish bank’s IT and data capabilities.

Speaking at the Banking & Payments Federation Ireland (BFPI) Annual Retail Banking Conference 2019 today, Deputy Governor Ed Sibley outlined the Central Bank’s concerns regarding the banks’ approaches to delivering for their customers. 

He said: “On too many serious issues – such as tracker mortgages, non-performing loans, some Brexit preparedness issues - the Central Bank has had to push too many retail banks too hard over too long to actually put customers first,” adding that “sustainable resolution of mortgage arrears has required determined and ongoing Central Bank intervention to protect consumers’ interests.”

Mr Sibley highlighted that “delivering for customers requires more than branding and marketing slogans – being trustworthy requires delivering in line with them”.  He further noted that: “In a world where new competitors may offer more efficient and more focussed product offerings, customer inertia may no longer be an adequate defence to customer attrition.  If you truly believe that relationship building and trust are important for your long-term success, further change is needed.  The Central Bank will continue to push you to do so but you also have to genuinely and meaningfully want to.”

On the topic of financial innovation and technology risks the Deputy Governor said that: “There remains a need for substantial investment in Irish banks’ technology and data capabilities.  Many banks still use outdated and fragmented IT systems.  The foundations are not yet sufficiently strong to effectively manage the technology risks.”  He added that “Boards and senior management need to take responsibility for safeguarding the trust in and reputation of their organisation by prioritising the security, resilience and use of their data and systems.”

Mr Sibley identified some of the profitability challenges facing Irish banks, including the low interest-rate environment, noting that “banks may face incentives to elevate risk taking to meet return expectations of market participants.”  He outlined the Central Bank’s focus on this risk and the work being done to address it. 

The Deputy Governor concluded by stating that delivery for customers “requires that retail banks are financially and operationally resilient, well-governed, understand and manage their risks and have sustainable business models.  Whatever changes come to products, services, delivery channels and customer expectations, these fundamentals will remain of crucial importance and will continue to form the basis of the Central Bank’s approach to the prudential supervision of the retail banking sector.”