The invitation to speak at this conference was actually the first decision put to me on becoming Economic Secretary.
If only all my future decisions could be so straightforward!
As this will be the last BBA retail banking conference before the change to UK Finance, I want to wish all at the BBA the very best as you join forces with the CML, Payments UK, the UK Cards Association and others.
Having entered Parliament from working myself in the retail banking sector, I appreciate many of the challenges you face as an industry, and will ensure that the needs of the sector are understood across Whitehall.
I am conscious of the way the industry is often portrayed – with the Wall Street image of bankers far removed from the experience of cashiers and the many other staff in retail branches across the country.
And we should not lose sight of the fact, as I flagged in a speech in the City on Tuesday, that two thirds of the jobs in financial services are outside London – including many within this sector.
For the retail banking industry, I appreciate that the task of serving your customer is increasingly complex.
Particularly so in a way that delivers profitability in a low interest rate, slow wage growth, changing regulatory environment.
Productivity remains stubbornly low, and the government still has work to do to tackle the deficit.
Saving for retail customers is hard. That is why the government has set up schemes to support those looking to buy their first house or save for later life, like the Help to Buy and Lifetime ISAs.
The types of products banks sell, and the way they’re sold, has also rightly come under scrutiny.
With nearly £27 billion paid out on PPI redress alone, getting this right has an impact not just on banks’ ongoing profitability, but also on customers’ trust in you.
I also recognise that alongside the economic challenges, the regulations just keep coming – although that is not a new feature:
The Fourth Anti-Money Laundering Directive tabled this week in Parliament, the General Data Protection Regulation taking effect next year, the Payment Accounts Directive which came into force last September, and the Second Payment Services Directive still to come.
More stringent capital requirements, the implementation of ring-fencing, a new conduct regime necessary after various scandals, and Competition and Markets Authority remedies to improve competition.
All important individually, but it is right to be mindful of the cumulative impact.
So rightly, you have asked yourselves some difficult questions about the type of firms you want to be.
Technology changes in retail banking offers opportunities for the first movers, but risks to some established players.
And alongside these challenges, many also worry about Brexit.
Not all retail banks are impacted by the issues of market access, passporting, equivalence. Brexit impacts different financial sectors in different ways. So the priorities and needs of the retail banking sector need to be considered on their own merits, not as part of some catch all uniform City view, and I am keen to explore that with you.
We need to respond to what Brexit means for your customers, their prospects, and for our economy as a whole.
And in leaving the EU we need to prioritise British prosperity, recognising the need for an implementation period, so we have a slope, not a sudden cliff edge.
To meet these challenges, I know that you need to be able to hire the right people.
I’ve heard a lot of people in financial services worrying that Brexit will prevent firms from recruiting the talent that you need.
That, in my view, misunderstands both the will of Parliament, and that of the public, when they talk about controlling immigration. There is no Parliamentary appetite to stop the world’s brightest and best coming to our shores. And the Prime Minister made clear in her Lancaster House speech that this is not the government’s intention.
Amidst the challenges, there are already positive signs of the opportunities ahead.
Supported by a new approval process, we’ve seen new challengers emerge in the banking sector. On one hand, you have a new entrants, like Metro, competing by offering a traditional, full service, high street bank. Others, are targeting niches, and neo-banks, such as Atom, are taking on incumbents with the latest technology, using face and voice authentication to make life that bit easier for their customers. All offer consumers a choice, aided by fast, easy switching. And it is customers exercising their choice that will drive up standards, improve service, dictate price.
This is all underpinned by continued and quickening technological change. This week we mark the 50th year since the introduction of the ATM, so technological change is not new, but the opportunities it brings are.
What is clear is the customer appetite for new technology - services like tap and go, which were novel even a year or two ago, now feel like the norm. I am keen to work with you to ensure that government and regulators respond quickly and positively to innovation, which benefits both firms and customers alike.
The Second Payment Services Directive is central to this future direction of travel. I’ve been in the role for two weeks, and PSD2 has featured heavily. I’m eager to give you as much time to implement the changes in the Directive as possible. As a result, I have asked officials to progress the regulations with a view to laying them ahead of the summer break.
Included within PSDII is a simple but important message: that a customer’s banking data belongs to them.
Customers should be able to crunch their data in new and powerful ways, and access new payment options.
And in the UK, we want our banks to share this data via an open Application Programming Interface – API – architecture.
It will enable better personalised product comparisons;
Make it easier to save;
Or simply deliver targeted offers for places where your customers regularly shop.
It will enable customers to make better use of their own data.
It is an evolution that moves beyond the previous debate about treating customers fairly, to one where the customer is better able to take exploit choices, which delivers benefits to the UK economy as a whole, and firms who grasp this change, a deeper relationship with their customers.
In conclusion, I recognise that the retail industry has faced a significant number of challenges, both economic, legacy, and regulatory.
But whether it is recapitalising after a major banking crisis – Or reforming the incentives that drove mis-selling – you’ve shown yourselves up to the challenge.
My job is to help support the industry as it adapts further – to open banking, technology, new entrants – in ways that deliver better services to customers.
I’m looking forward to working with you in the months ahead to ensure the role of retail banking is both understood in Parliament, and its opportunities recognised across government.
I’m keen to ensure government responds quickly and constructively to you, mindful of the £71 billion of tax the financial services contributes to public services, the million people it employs and the central role retail banking plays within the industry and serving the public.
In joining you today, I wanted to signal that intention, and I look forward to working with you.