Eduardo Arbizu: “Digitization offers significant opportunities for compliance”

Eduardo Arbizu , BBVA’s Head of Legal & Compliance, participated in Riesgo de Conducta y el impulso de la reputación de la banca (Conduct Risk and bolstering bank reputation) a round table debate held within the framework of the 24th Meeting of the Financial Sector: A sector undergoing transformation, organized by Deloitte, in partnership with ABC and Sociedad de Tasación. Joining Eduardo Arbizu were Mónica López Monis Gallego, Chief Compliance officer of Banco Santander; and Óscar Calderón, General Secretary and Secretary to the Board of Directors of CaixaBank.

Regarding the definition of conduct risk, Eduardo Arbizu indicated that, unlike credit risk, it is not an inherent risk of banking. “Conduct risk is an offshoot risk” and “the important thing is to make it part of the bank’s ordinary management procedures,” he said. Arbizu explained that, for BBVA, conduct risk is very similar to compliance risk, and is a category of operating risk. In his opinion, “the essential thing is to make it part of the bank’s ordinary management procedures.” In this regard, he explained that all conduct alerts are addressed by an integral risk management system, so that they are solved at BBVA’s top executive level, with the involvement of all areas.

Eduardo Arbizu highlighted the importance of an organization’s culture in minimizing conduct risk, indicating that it “really is what makes a difference.” He explained that setting “clear rules” within the culture is essential for adjusting the conduct of the group of people that make up an organization. How can a culture be changed? In his opinion, the defining factor here is the backing of top management. In second place, the organization’s culture should be effective and credible, and recognize positive conduct. Finally, it is also necessary to ensure that non-compliance has consequences.

Regarding conduct risk in a digital environment, Arbizu indicated that digital customers are more demanding about the simplicity and the quality of the service. Also, they are less tolerant with conduct errors and exhibit a higher social conscience.

In this sense, he recognized that digital strategies pose a number of challenges that companies must know how to address, in order to ensure regulatory compliance while offering the best customer service. “Just as they become increasingly demanding, digital customers want immediacy. Meeting regulatory requirements to allow customers to take out a loan or open an account in just one click and in tenths of second is quite a challenge.”

BBVA’s Head of Legal & Compliance said that in the digital environment ,“we face increased risk and bigger threats,” such as cybersecurity. But at the same time, he emphasized that “in the field of compliance, digitization offers very significant opportunities”. He also noted how “technologies such as big data, artificial intelligence and biometrics offer pivotal advantages from a regulatory compliance standpoint.” Eduardo Arbizu underscored the investment that BBVA is making to capitalize on these capabilities to minimize conduct risk. Finally, he argued that control areas “cannot be the last stop of the train, green-lighting the rollout of a new product or service, but should be informed from the start” in order to design them efficiently.