banks this would be one of the more benign outcomes. and it seems to be happening right now. scenario two : fintechs might break up the value chain of banking. banks would end up losing revenue, market share and direct contact with clients. the result might be a more fragmented market where some players operate outside the scope of regulation and supervision. scenario three : banks might still end up being crowded out. at the same time, however, the fintechs could be swallowed up by big tech companies, such as google, amazon and facebook. the market would become more concentrated, less competitive and less diversified. whichever direction we are headed, there is one thing we supervisors worry about : increasing or unidentified risk. and there are indeed some risks that have become more apparent now that fintechs have entered the scene. a basic truth is that new players make the market more competitive. and that could squeeze profits and force banks to cut costs in areas such as risk management. this is a general concern we have. at the same time, bank funding might become less stable. new products, tools and services 1 / 3 bis central bankers'speeches enable depositors to easily and quickly switch banks ; they can select a better offer in a heartbeat. for banks, deposits might become a less reliable and more costly source of funding. with regard to lending, we are also seeing new trends such as peer - to - peer lending and crowdfunding. here, savers and borrowers interact directly – banks no longer serve as middlemen. as these new businesses grow, risks associated with traditional banking might emerge – just think of the risks from maturity and liquidity transformation. some peer - to - peer lenders are already securitising the loans they originate from their platforms. regulators will need to deal with the resulting vulnerabilities. the work on shadow banking done by the financial stability board and the basel committee on banking supervision might serve as a basis. some fintechs also apply new models for scoring the quality of loans. these models are based on vast amounts of data and are supposed to be more precise than traditional approaches. but they have hardly ever been tested in a severe recession or a crisis. so we don ’ t know how well they would work in such situations. in respect of asset management, new products such as robo - advice are now appearing. these are computer programmes that advise customers on how to invest their money. depending on their design, they might lead many investors to

and innovation and expand their presence and their reach throughout the country. as you can tell, this is consistent with our objective of strengthening the rural banking system so it can more effectively serve the countryside and better contribute in promoting balanced and sustainable growth for our nation. in this regard, the rbap plays an important role in ensuring the success of this program, jointly with the pdic and the bsp. beyond the sprb, however, the bsp shall continue to ensure that a sound regulatory framework is in place that would enable philippine banks, including rbs, to cope with both domestic and global challenges. the bsp will also continue to pursue reforms to further strengthen the capitalization of banks and improve the supervisory oversight of risk management of banks. in addition, we will also continue to implement reforms geared towards improving the corporate governance structures of banks, including rbs. sustaining and ensuring the strength of the rural banking sector is not, however, just the role of the regulators. it is a partnership with the regulated. as in the past, we therefore look to the solid support of the rural banks, through the rbap, in effecting important reforms and initiatives that would improve the resilience of our banks, including the rbs, and our financial system as a whole so they will continue to withstand the impact of domestic and global crises and remain important channels for investment, credit and overall economic development. on this note, i wish to congratulate all those who have been instrumental in putting together this program. the bsp looks forward to the success of this program in close partnership with pdic and rbap. thank you and good day!