Yet it seems that the very excess capacity of the banking sector is acting as an entry barrier to banks from other jurisdictions, given that the potential gain in costs and synergies arising from the elimination of duplicated networks and services occurs chiefly in national mergers. Lastly, another means of improvement would stem from cost-cutting and the subsequent enhanced efficiency. Admittedly, I did say our banks made notable efforts to shed the excess capacity in place pre-crisis; but there still remains room for improvement. In any event, further gains in efficiency appear to be closely linked to technological transformation. Technological change We are all aware that technological change is one of the main transformations banking must pursue. If we look at what has happened in recent years in other sectors, there is clearly a need for the banking business model to adapt. Technological change is a complex matter, but one that is fundamental for tackling the future. It should be part and parcel of deeper reflections relating to the banking business model and its sustainability in the long term. Naturally, technological adaptation calls in many cases for significant investment in systems to be made. However, such investment today will be key to future income. 11/15  Clearly, the gains in efficiency will be very closely linked to technological change. Most banking transactions in Spain continue to be made through ATMs and bank windows. However, the proportion of online users is growing every year. In step with this trend, the potential for cost savings is significant.

Some pursue strategies geared to obtaining high revenue, which counter relatively high costs. Others focus on low costs that are compatible with relatively low revenue. And others strike a balance between average revenue-generating capacity and medium or low-level costs. These differences in strategies are reflected in different action plans: some are geared to growth in loans or fees; others to streamlining costs through various means, although two appear to be prominent, namely digitalisation and externalisation. Conclusions To conclude, I believe we all share the view that the challenges the financial sector faces in Spain are far-reaching. The social environment, supervision and regulation appear not to be helping, since they increase pressure on banks. However, experience shows that, sadly, it is almost always under pressure that reforms are undertaken. Compared with their European competitors, Spanish banks have significant comparative strengths to address the changes. These include higher profitability and efficiency, and a lower potential impact from the implementation of Basel III. We should harness these advantages and attempt to correct those areas in which we are less competitive. Irrespective of improving profitability, efficiency and solvency levels, the key long-term challenge involves transforming the business model. And as I have said, technology is central to this challenge. The future will be for those who are most prepared. In this respect, I believe that any challenge can be viewed from two different and, in fact, opposite standpoints: as a threat or as an opportunity. The difference between both views lies in the attitude adopted and the willingness deployed.