Just as the cogs and wheels of a watch all mesh together, the changes unfolding in specific sectors are not occurring in isolation; they are interrelated, as the slide shows. What is driving these fundamental changes? The initial impulse for transformation often comes from new technical possibilities such as smartphones and tablets, Big Data applications or artificial intelligence. These technologies are opening up new payment services for end clients (e.g. Twint) and new business models for companies. The mantra here is invariably faster, easier, cheaper. At the same time, technology is lowering barriers to entry for new players in the market for payment services, such as fintech companies. And finally, the payments infrastructure and regulatory framework play an important role, in terms of both securing the payment system and ensuring fair competition – which in turn should permit further innovation in the future. These changes are presenting major challenges for all stakeholders in the payments ecosystem (cf. slide 3). I would like to discuss four of these in greater detail. First, the central role of the client interface; second, the disaggregation (or ‘unbundling’) of value chains; third, digital ledger technology (DLT); and fourth, cyber risks. The first challenge concerns client contact and client data. For established providers of cashless payment services, such as the banks, the payment interface has long been an important client touchpoint. In the digital age, non-banks, such as large internet platforms and online retailers, can leverage payment data to target their clients with personalised products.

Innovation is important, but it must not come at the expense of stability or confidence in existing payment systems. The fourth challenge relates to the downside of digitalisation: cyber risks. Cashless payments are a particularly attractive target for cyber attacks. A lot is at stake for central banks in this regard too, as a loss of confidence in the payment system could ultimately undermine confidence in money. Tackling such risks may open up new business opportunities. Achieving significantly greater resilience to cyber risks could give Switzerland an important competitive edge in the future. In particular, it might be worth investing in a new, robust and secure data communications infrastructure. Promising solutions are currently being developed right here on our own doorstep. For example, a team from ETH Zurich has created SCION, a new internet architecture which enhances the security and reliability of internet communications considerably. This technology could form the basis of a secure Swiss finance network. For the  10  While such tokens would be backed by an official currency like the Swiss franc, they represent a claim on a given private sector provider, not on the central bank. Page 8/9  Swiss payments ecosystem in particular, this would allow secure and flexible communication between participants. To meet these four challenges and prepare for the digital future, the Swiss financial centre needs to engage in an open dialogue on strategic options. It is important that we reach consensus on what a robust, attractive and future-proof payment system in Switzerland should look like.