the part of consumers who do not properly monitor their accounts. trends in the financial services industry perhaps, some may judge such information as an indication that the combination of market forces and industry trends has had negative effects on consumers. on the contrary, many benefits have accrued to consumers of household and business credit as the result of the remarkable growth and technological developments that have occurred in financial services. computer and telecommunications technologies have lowered the cost and broadened the scope of financial services. as a consequence, specialized lenders and new financial products tailored to meet very specific market needs have proliferated. at the same time, the development of credit - scoring tools and the securitization of loan pools hold the potential for opening doors to national credit markets for both consumers and businesses. deregulation has created important structural changes in the financial services industry and has contributed significantly to creating a marketplace that is increasingly competitive and highly innovative as a result of the entry of new players or expansion of existing players. throughout our banking history, we have seen significant adjustments to existing policies to enable markets to respond to the demand for services. these structural changes have heightened competition, resulting in market efficiencies that continue to help drive down costs and foster the emergence of increasingly diverse and highly specialized organizations. these entities range from banks and brokerage firms that offer their services exclusively through electronically based delivery mechanisms to locally based public - private partnerships that provide counseling and financing arrangements to low - and moderate - income families. corporations, for example, often allow employees to self - direct their investments in pension and other benefit plans, whereas employers dictated such decisions twenty years ago. the advent of on - line brokerage firms has enabled individual investors to directly conduct stock transactions. the role of financial education however beneficial, constant change, of course, can be unsettling, and one challenge we face is overcoming such anxieties. but just as the rapid adoption of new information technologies has expanded the scope and utility of our financial products, so, too, has it increased our means for addressing some of the challenges these changes pose. for example, just as universities provide remote learning options to allow students to pursue continuing education via the internet, consumers can use software to create customized budgets to develop long - term savings strategies for retirement or for their children ’ s college education. in both scenarios, technological advances represent the opportunity for achieving efficiencies and exercising preferences, but only when the end users possess the knowledge necessary to access pertinent information and to

loss accounts are especially difficult to interpret in banking. and there is considerable uncertainty about what the correct business choices should be regarding scale, combinations of activities and technologies. to simplify the analysis, i will focus on the direction and pace of change rather than on a more ambitious comparison between current conditions and some ideal benchmark. enterprises need to cut costs and branch networks while at the same time converting them to higher value - added services. in the process, at least in the medium term, employment would have to fall and skills be upgraded. there is widespread agreement on the desirable features of the restructuring. there should be fewer and on average, larger financial institutions in europe. concentration, therefore, is set to increase as it is in most other geographical areas. consolidation can help to withdraw capital, to alleviate destructive competition, and to reach the minimum critical size needed to support the required expenditures on infrastructure. it can thus contribute to achieving efficient production and distribution, notably in wholesale segments such as investment banking and the processing business ( eg global custodians ). while generalisations are hazardous, it seems fair to say that in addressing these challenges, by comparison with the united states and even the united kingdom, the banking industry in continental europe has faced particularly testing conditions which may explain its relatively slow pace of adjustment. first, the degree of excess capacity appears to be greater, especially when assessed in relation to the goal of an area - wide single market. this does not emerge so much from comparisons of the number of institutions or size - concentration measures. it is, however, more apparent from indicators of profitability such as returns on assets and costs, especially labour costs, and ( on some measures ) branch density, which tend to be less favourable in much of continental europe. this may be the legacy of the more sheltered environment provided by governments. second, corporate governance structures have been less sensitive to market forces. in particular, government ownership and other forms of support have been more pervasive. in addition, for historical reasons, savings, cooperative and mutual banks have accounted for a relatively large share of the overall market. in a sheltered environment, the coexistence of different types of ownership structure was of little consequence. but with growing competition, it has become a significant factor influencing the means and incentives of the various players to adjust, and hence the speed and pattern of the restructuring. the degree of discretion enjoyed by management, the determination of acceptable profit targets, the ability and willingness to take on risks