It has been just over a decade since the last economic and financial crisis, and at the beginning of 2023 we again face the specter of a possible global banking crisis. This time the reasons are many and different.

Complex risks of an economic, geopolitical, and climatic nature led to and continue to introduce immediate measures and rules aimed at reducing or eliminating, among other things, the risk of contamination, deepening the loss of trust of customers and the public in the financial and banking system.

In one of my recent public speeches, I mentioned that Romania’s banking system should be a vital component of the package of solutions to solve the country’s current problems, and not an additional source of problems.

Banks have an important mission at the national level, and that is why they must make and prove constant and significant efforts for the urgent structuring and implementation of business models that strengthen the loyalty of existing customers and contribute to the attraction of new customers from a wide spectrum of the country’s population

Increasing trust in the banking system is a key element that specifically contributes to both meeting the needs and expectations of the population, and strengthening the sustainability and sustainability of the business model, and why not, the very existence and reason for the bank.

In this context, financial inclusion becomes an important component of the mission, the vocation of a banking institution operating on the national territory.

Where are we in Romania?

I mentioned the global analysis made in 2021 by the World Bank, namely the Global Findex, which also includes EU countries. The World Bank mentioned that in 2021, more than 3.6% of the population of the European Union was excluded from accounting relations or other financial relations with the bank (this is about 13 million adult residents).

Unfortunately, the analysis highlights the fact that in 2021, Romania had the highest percentage of adults without a bank account and financial relationship with a bank, namely 30.9% (this is true, we are seeing an improvement). compared to the situation in 2017, when 42.25% of the adult population was “unbanked”).

After us, Bulgaria with 16% of the “unbanked” adult population, Hungary 11.8%, Croatia 8.2%. If we look at the top, that is, the developed countries of the EU, we will find significant progress in the development of modern financial inclusion, which has also shown its completion through its contribution to the level of development and modernization achieved by these countries. .

In Denmark there was 0% of the population without financial relations with a bank, in Germany 0.02%, in Austria 0.05%, in the Netherlands 0.3%, in Sweden 0.3%. More than 10 EU countries have managed to develop direct banking relationships with almost 99% of the adult population, providing banking services, advice, savings products and financing to the population.

Banks in the country must demonstrate efficiency, sustainability and sustainability.

The complex activity carried out by a banking institution necessarily requires the constant transfer into reality of economic, financial and, at the same time, social obligations at the community level.

I have expressed my position several times that for any bank, a specific and effective attitude and strategy, oriented to the needs and expectations of all stakeholders, without excluding common interests and social values, are decisive and fundamental aspects of its existence.

The value of financial inclusion, implemented in practice, is one of the solutions for sustainable community development and prevention of financial crisis, creating, among other things, strengthening economic and financial stability. Economic and social development of the country and community is one of the engines of modern transformation of society.

A socially responsible bank can play a critical role in supporting local or central governments in efforts and programs aimed at improving development and living standards, reducing gaps and economic and social inequality. Otherwise, such elements can become a source of discontent and the emergence of risks that will affect both the short- and long-term economic and financial stability at the national level, as well as the stability and resilience at the level of banking institutions.

As I have already mentioned, banking activity is one of the important directions of strengthening and protection of economic and financial stability. We all agree that achieving optimal stability and resilience of the banking system must be supported by a strategy and business model developed and implemented responsibly and professionally.

It is true that in this difficult period (geopolitical events, high inflation, uncertainty in international markets, inequality and social tensions) banks need to address some priorities that they may consider more urgent compared to financial availability, namely business sustainability, strengthening resilience, good risk management, cyber security and, no less important, participation in the process of transition to a sustainable economy. In the same vein, green finance and progress in digitalization require enormous financial efforts and expertise that match the level and requirements of this period.

The development of the banking sector should involve the development of activities at the territorial level through a network of branches, which requires investments in “filling” with qualified banking personnel.

Knowledge and application of best practices at the European and world levels are necessary objective priorities. Challenges and solutions to these goals can be found in banking policies and programs to achieve both inclusion and financial education. The numerous financial education programs launched by the National Bank of Romania and, unfortunately, only a small part of the banks in our country, need revitalization and continuous support to increase the number of those included and also to expand the territory. area as a whole at the level of countries

At the same time, continuous efforts and programs of communication and cultural adaptation at the local level are necessary to interest and understand the general expectations of the general public of our country. The inclusion of Romanian education at all levels needs to be “updated” according to the needs by including financial education among the priority areas in the curriculum.

I will briefly return to another topic that I have touched on publicly whenever I had the opportunity. The development of the banking sector, its modernization and the implementation of an efficient and effective business model must necessarily include the development of activities at the territorial level through a network of branches, which require investments in “providing” qualified and purposeful specialists. bank staff (I will remind you about the qualitative requirement, namely that respectful and responsible treatment of the client implies the same level of treatment of bank employees by banking institutions and society).

We must achieve a balance between the efficiency of financial activity and its social utility.

I agree that digitization is an effective and efficient transformational force for financial institutions. But digitization should not lead to financial and social exclusion. On the contrary, the expansion of the implementation of digitalization, innovation and, of course, cyber security must be constantly accompanied by the development and existence of the widest possible network of branches throughout the national territory. We have recently noted that in our efforts we must strike a balance between financial efficiency and social utility.

Digitization and innovation are designed to ensure the prosperity, sustainability and integration of Romanian society and enable the transition from quantitative to qualitative approaches at all levels of society. At the same time, financial education and personal contact with the client or potential client contribute decisively to a better knowledge of the latter, their mentality and expectations, their needs and their existing or future potential. Only in this way is it possible to develop solutions and banking products adapted to the client’s needs, capable of also covering aspects related to proper risk management and the application of regulatory acts and good banking practices.

Ed.: Prof., Univ. Dr. Nicolae Danila is the President of the Economic, Legal and Sociological Sciences Section of the Romanian Academy of Sciences and has an impressive track record in the management of commercial banks in Romania