Other parts of this series:
When Jean-Claude Juncker took office as president of the European Commission in November 2014, he made clear that over his five-year term he would focus on initiatives that promote growth, competitiveness and jobs within the European Union. Over the past year and a half, Juncker has rolled out two distinctive strategies that include innovation and growth agendas for financial services institutions (FSIs) across Europe. Both initiatives warrant special attention from FSIs.
The first initiative is the EU Action Plan for Circular Economy. In an effort to boost the European Union’s global competitiveness, foster sustainable economic growth and generate new jobs, this plan would “close the loop” of product lifecycles through greater recycling and re-use. The plan means that FSIs will have to pay greater attention to integrating sustainability into their portfolio of products and services, as well as in their investment decisions.
The second strategy is the proposed integrated market for retail financial services across Europe. The concept here is to improve choice, transparency, competition and digitalisation in retail financial services to the benefit of European consumers. A truly integrated market across Europe also would facilitate true cross-border supply of financial services, allowing FSIs to make the most of the economies of scale.
While neither initiative is often viewed as a top priority for the European Commission, both present key opportunities for FSIs to unlock their innovation potential. FSIs’ main challenge now is to figure out how to do that by incorporating those initiatives into their own strategies, customer relationship management, businesses models and daily operations.
I believe FSIs can accomplish that by embarking on an innovation-led transformation entailing:
- Creating innovative financial instruments that couple the risk profiles of small and medium-sized enterprises with sustainability, resource-efficiency and social considerations in the calculation of return on investment.
- Becoming a trusted partner to European institutions, able to act as a bridge between public institutions, investors and lenders in the creation of a European financing platform that can unlock investment for new types of projects, such as the circular economy.
- Being a financial orchestrator in the form of an intermediary for national and regional European financial actors. FSIs could, for example, participate in the European Fund for Strategic Investments part of the Investment Plan for Europe.
- Leading by example by incorporating the circular economy principles into corporate strategies, daily operations and service portfolios.
- Responding to consumers’ digital expectations with innovative, user-centric digital products and services.
I am excited about the opportunities for innovation-led growth among European financial services. Are you ready to play your part in the transformation?
Next time: The role of regulators in supporting FSIs as they work to unlock their innovation potential to stimulate business growth across Europe.