Fintech institutions operate on a very different business model compared to traditional banks and as such, they have a competitive advantage in terms of cost structure and overheads. Their cost advantage and speed of operational and business decision making is evident by their rapid expansion and their proven ability to grow their user base quickly. However, although Fintech bring obvious benefits to users, up until recently we haven't seen large defections of customers from traditional banks to these new players. The confidence to the incumbent banking structure together with the value that people place on their existing bank relationships provide the opportunity for an adjustment period for incumbents. Having said that, generational differences matter. Consumers aged 25 to 40, also known as generation Y, have had the biggest effect on digitization of financial services2. Generation Y account for almost 50% of mobile banking users. Based on this trend, banks can expect Generation Z (ages up to 24 years) to be even more engaged in digital banking and technology driven solutions. In contrast, generation X, the baby boomers, still see value in live communication and visiting physical bank branches. These younger consumers look for alternative ways of processing their financial transactions that are simpler and faster. The banking system needs to adapt. Incumbent banks that work with dated technologies and overextended branch networks are likely to lose their competitive edge. Technological innovation is the way to increase efficiency as a result of new competitors entering the market and new generations being more reliant on technology.

However, beyond the banking sector’s response, if society is to derive maximum benefit from digitalisation while minimising the costs of the transition, I believe that a comprehensive response is required from the public authorities. A response which surely transcends the financial sphere, to which the financial authorities can no doubt make an important contribution. That is why we are going to focus precisely on improving digital skills in the coming years using, for example, the Financial Education Plan launched jointly by the Ministry of Economic Affairs and 1/2  BIS central bankers' speeches  Digital Transformation, the CNMV and the Banco de España. Because we are fully aware that digital literacy is also part of our financial education. That is also why the Banco de España has long identified the economic and population differences in urban and rural areas (also in terms of access to general services and, more specifically, to banking services) as phenomena that warrant priority analytical attention. Such analysis must provide the basis for informed decision-making. Our most recent annual report, presented before Parliament last year, included a chapter dedicated to these issues. In the coming months we shall present the findings of several studies which examine in depth the phenomenon of financial exclusion in relation to digitalisation processes. Specifically, we are going to present a comparative study of access to cash in Spain and in other euro area countries, focusing particularly on the differences between rural and urban areas.