By promoting digitization, both for banks’ own internal operations and for 2  BIS central bankers’ speeches  customers’ experience, the cost for both parties would be lowered. Additionally, we may set up and promote more usage of common utilities such as banknote handling centers or common Point of Sales (POS). From the policy perspective, standards and ecosystem should be developed to ensure compatibility, interoperability, security and confidence. Moreover, competition in market segments with low competition, particularly payment services, will be promoted in the third Financial Sector Master Plan. On inclusiveness, merely upgrading the technology would not be sufficient. Following our earlier analogy of driving a car on a journey, we must take into account the needs of all the passengers. In this case, our next milestone is to achieve a more inclusive banking system that serves all groups of customers, particularly household and SMEs, many of whom have been left on the side of the road while others are driving by on the journey. For individuals and households, they should be able to more easily access financial services and at a more reasonable cost. I am not merely talking about loans, but also basic services such as deposits and fund transfers. The latest financial access survey indicates that lack of access is partly because of the distance to nearest service providers is too far and the cost is too high. This is where technology and collaboration such as the use of agents can help.

A bank intending to serve such conglomerates should have an integrated system across countries and advisory services for alternative funding such as from the capital market. These require more investment in IT and people. On connectedness, financial integration has a key role in supporting business opportunities in ASEAN. If you compare the pace of financial integration to economic integration, there is still a lot of catching up. For example in Thailand, foreign assets in the banking system account for about 10 percent of total assets, still well below intra-ASEAN trade at 24 percent and investment at 17 percent. Currently, financial institutions are already on the journey toward financial integration through outward presence, as well as strategic partnerships and alliances. This will be further enhanced with Qualified ASEAN Banks (QABs) and greater cohesiveness and transparency of regulation in ASEAN. To underpin ASEAN’s promising future and growth potential, infrastructures necessary to facilitate financial integration is also important. Further linkages of financial infrastructures should be encouraged and promote usage of already integrated systems, such as the regional payment systems. I must admit that the regulatory landscape for banking in ASEAN countries are quite diverse and include many legacy regulations which impede integration. This makes financial integration more difficult to achieve. This is one area that ASEAN as a group has recognized and will tackle under its financial integration plan Post-2015 to accommodate AEC 2025 agenda. BIS central bankers’ speeches  3  Finally, on sustainability, a banking system that is competitive, inclusive, and connected needs to also be sustainable.