take into account that digitalization of banking is not a new phenomenon ; it has been present for more than 3 decades ( in the form of automated teller machines, electronic payments, e - banking ). the emergence of fintech is only the latest wave of innovation to affect the banking industry. still, in the last decade, a significant change has occurred in the way of using technology, thus creating environment in which disruption can happen more quickly, and urging traditional banks to adjust faster to maintain market share. besides the advancement in technology, a few other factors have also contributed to proliferation of financial innovation. the fact that banking industry was dealing with the legacy issues of the global financial crisis - impaired balance sheets, perhaps was important factor that provided space for non - banks to penetrate in financial business. also, banks ’ resources to a great extent were tilted towards implementation of the new basel 3 requirements aimed at increasing the resilience of the banking system. the increased competitive pressure has been further amplified with the regulatory changes in the payments segment - psd2, such as elimination of barriers to entry for third parties by providing access to data and accounts of the customers in the banks – so called “ open banking ". according to the research by pricewaterhousecoopers 2, banks have very firmly moved from viewing open banking as a compliance exercise to an opportunity to compete, innovate, and deliver value and more than 33m people are expected to have signed up to open banking driven services by 2022. against these background many fintech firms, that are not regulated entities, have launched new, differentiated and tailor made products, putting a significant pressure on traditional financial institutions. very important factor that most probably will shape the future of the traditional banking industry is the way how traditional banks approach and embrace the financial innovations, be it directly on their own or through cooperation with new fintech companies. not only will fintech companies try to behave like banks, but banks will also try to behave like fintechs. while some market observers estimate that a significant portion of banks ’ revenues, especially in retail banking, is at risk over the next 10 years, others claim that banks will be able to absorb or outcompete the new competitors, while improving their own efficiency and capabilities. in this context, the bis envisages 5 different scenarios on how the fintech explosion might impact banks that range from a scenario where the incumbent banks digitize and modernize themselves to retain the customer relationship and core banking services, lever

##aging the technologies to change their current business models ( which is not far away from the currently observed trends ) to a scenario where banks have become irrelevant as customers interact directly with individual financial services providers as the need for balance sheet intermediation or for a trusted third 2 / 4 bis central bankers'speeches party is removed and banks are displaced by agile platforms and technologies. following the example of the european banking association, early this year, we made a short survey of domestic banks to obtain information regarding their experience with modern - day technological solutions. the results of the survey indicate that almost two thirds of domestic banks do not have any experience with fintech companies and even surprisingly, they do not have plans to establish any relationship in the near future. the banks that have some experience with fintech companies point that it is rather a commercial partnership with existing fintech firms for launching new products or services. in addition, a few banks answered that they prefer to develop in - house fintech solutions without formal cooperation with external parties. the most frequently mentioned motives of the banks that have formal partnership with fintech firms or develop their own solutions for usage of new technologies included attracting new or maintaining the existing customers as well as cost savings. among the technological solutions which are already in use or are in testing phase, most of the banks cited cloud services, usage of biometric properties for client identification purposes and using of big data analysis for credit scoring. currently, the banks do not have experience neither with algorithms used for the purpose of investment advice or decisions nor with any dlt based solutions. the regulators and policymakers also face challenges. rules and regulations should keep pace with innovation, providing supportive environment but also adequately assessing and mitigating potential risks. consequently, to apprehend the full benefits of digitalization, the authorities need to reach across traditional policy reluctances and across different levels of institutions, and develop a unified approach to policymaking. the financial stability board stocktake of regulatory approaches to fintech finds that majority of jurisdictions surveyed have already taken or plan to take regulatory measures to respond to fintech. the scope and scale of changes or planned changes vary substantially, depending, among other things, on the relevant size and structure of domestic financial and fintech sectors and the flexibility already provided by the existing regulatory framework. an example of innovation in the legislative area has been set up by the european union with the revised payment service directive ( psd2 ). this directive, which has been considered one of the more substantial regulatory changes