November 25, 2016 / 11:05 AM / 2 years ago

Digital the future for French banks says central bank boss

PARIS, Nov 25 (Reuters) - French banks must embrace new technologies to adapt their services and keep down costs to cope with the impact of low interest rates on revenues, the country’s central bank said.

Low-cost internet competitors and a drop in the numbers of clients coming into their branches, which hurts profits and forces closures, have already forced French lenders to boost their online and mobile-based operations.

“In terms of revenue, one of the answers ... could be diversification of services ..., as well as possibly adapting their pricing,” central bank governor Francois Villeroy de Galhau told a conference in Paris on Friday.

Banks like Societe Generale, Credit Agricole and BPCE are working on or have already launched aggregator platforms that enable customers to handle all their bank accounts in one place.

Others, such as BNP Paribas and Credit Mutuel have teamed up to create a smartphone app to help customers pay for purchases in stores and online or transfer money.

Faced with falling retail banking revenue as mortgage borrowers negotiate lower rates and customers shy away from weak investment markets, French banks are working on new medium-term strategies due to be presented next year.

BNP Paribas has said that it is working on increasing fees in all countries, as well as on cost savings.

“As for the cost side, forward-looking planning of employment and skills must be a central lever of transformation,” Villeroy said.

“Indeed, the better these changes are anticipated, the better they progress on a social level”.

Societe Generale is one of the few French banks that has already presented a plan to cut branches and staff in French retail, while investing in digital technologies to face challenges from low interest rates and the rise of new entrants.

“Obviously, to face digital transformation, innovation must be at the heart of the future strategic choices of financial institutions,” Villeroy said. (Reporting by Maya Nikolaeva; Editing by Alexander Smith)

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