most companies are not concerned about reinventing the wheel but instead doing many things more practically, quickly and, in particular, more cost - effectively. the question is no longer “ bank or fintech? ” but programming interfaces and calculating costs. it is no longer a race to become the “ most digital ” bank or savings bank but to create an innovative – and therefore convincing – overall package. 4. can banks be innovative? let me now come to the third question i asked in my introductory remarks : " can banks be innovative? " in recent times, credit institutions have not exactly distinguished themselves as hotbeds of innovation – at least relative to fintechs. though banks have, in the meantime, initiated their own innovations – up to now, fintechs have proven to be the drivers of digitalisation. that said : it is not individual ideas we are talking about, but a bank ’ s overall package. and it is less about inspiration and more, above all, about perspiration. innovation is thus manageable. it is not my job, as a banking supervisor, to dictate to institutions how they should evolve. we are, and shall remain, neutral to innovation : our job is merely to ensure that banks and savings banks are able to shoulder the risks of their specific business themselves. but our supervisors are, of course, monitoring developments. in the process, we have identified three aspects which are important for making innovation a success. first : innovation presupposes openness to new ideas and developments. a not - inconsiderable share of change to date has taken place in peoples ’ heads. many senior bank executives first had to learn to take digitalisation and the new competitive situation seriously and to put themselves time and again in the place of their customers. i ’ m not saying that bank executives have to start learning to understand programming languages or memorise network plans. however, they should generally be able to understand the language of digitalisation. second : innovation presupposes the ability to do justice to complexity. banks ’ cyber defences are a good example. credit institutions are certainly a particularly popular target for attack because the rewards are huge. given the mounting threats, institutions are in a state of high alert. but being on high alert is just not enough. for cyber defence is by no means a trivial matter. in the middle ages, it was relatively easy to defend castles : by building moats and fortresses. and it was mostly clear from what

banking sector would appear to be faring quite well : the country ’ s banks and savings banks have managed to keep their earnings steady recently, and they have rigorously built up their capital buffers. yet the outlook for profitability is gloomy, and there are a multitude of reasons for this. there are two particular factors i would like to single out because 1 / 5 bis central bankers'speeches they shine a harsh light on what needs to be done. the first concerns interest business : it is no secret that the low - interest - rate environment is squeezing margins and deteriorating the outlook for earnings. but saying that, rising interest rates are not a panacea either. contrary to what is often assumed, they do not bring relief initially, but exacerbate interest rate risk, and that is particularly the case in germany. institutions will need to provide for this. the second reason why profitability is weak is, of course – and i won ’ t shy away from it – regulation. regulatory standards were made far tighter in response to the financial crisis, setting the bar higher for banks. that was the right move, and it was an important move – i think you will agree that a stable financial system is in everyone ’ s interest. but it is also right to say that tighter regulation is taking its toll on many banks. these shifts in the framework conditions are making themselves felt on banks, of course. time and again, institutions have raised these two points in an effort to pin the blame for their woes on monetary policy and regulation. but this " we ’ d be better off without you " mindset is of no help to anyone. albert einstein once even said that " insanity is doing the same thing over and over again and expecting different results ". because there ’ s no getting around the fact that the rules of the game of banking have changed. there is little to be gained from coming over all helpless – it is up to everyone to adapt to the new environment. actionable areas include different pricing models, cost reductions or also consolidation. but innovation is an actionable area, too. and given the huge splash made by digitalisation in recent years, it is a field that has garnered a great deal of attention. if nothing else, the wave of digitalisation has unleashed a strong sense of optimism about the future – fintechs bursting with fresh ideas and business models, customers keen to adopt digital banking, and, not least, the necessary technical capabilities such as broadband internet