some say there is nothing fundamentally new here : technology has always played an important role in driving change in the financial sector : from the telegraph to the atm ( celebrating its fiftieth birthday this year ) ; from screen - based trading to online banking. harsher critics even suggest the very phrase ‘ fintech ’ is little more than a marketing tool, promoting hype over substance. but this time is different, i believe, in four key ways : - first, since the financial crisis, financial intermediaries have faced unprecedented pressures to reduce costs to ensure their business models can deliver the sorts of returns expected by investors. some estimates put the necessary cost reductions as high as 35 - 40 %. savings of that scale sunday times hiscox tech track 100 league table 2017, available at : http : / / www. fasttrack. co. uk / league - tables / tech - track - 100 / mckinsey estimate of cost reduction required for uk and european banks to meet an 8 % cost of capital : see http : / / www. mckinsey. com / industries / financial - services / our - insights / a - brave - new - world - for - global - banking. all speeches are available online at www. bankofengland. co. uk / speeches require transformational, not incremental, change – and that inevitably involves technology. - second, technology has become much more easily and cheaply available in recent years, reducing entry costs sharply. until surprisingly recently, standing up competitive financial services technology required access to expensive dedicated systems and communications links – something rarely if ever available to new entrants. perhaps for that reason, key parts of the financial system have remained based on a patchwork of reliable, but sometimes startlingly old, hardware and software. the development of secure internet communications, service - based applications allowing firms to buy as much ( or as little ) support as they need, open - source code and other key pieces of infrastructure have changed all that, making it radically cheaper to build potentially transformational technologies whilst only incurring the marginal costs of doing so. - third, major advances in the services available to consumers of non - financial products have made them much more demanding of a similar consumer experience from banks and their peers. younger consumers in particular now rely totally on their phones, and expect the same ease of use, choice and service integration they get from the so - called ‘ gafa ’ ( google, apple, facebook and amazon

continues to reflect the current constellation of interest rates. while the narrow spread between the rates on different short - term deposits fosters shifts in the allocation of funds to the most liquid assets contained in m1, the steep slope of the yield curve also encourages such shifts from m3 to longer - term deposits and securities outside m3. the annual growth rate of bank loans to the non - financial private sector turned slightly negative in september, with annual loan growth to both non - financial corporations and households declining further and being negative. at the same time, the monthly flows of loans to households remained positive and even increased, while those of loans to nonfinancial corporations were negative. in the case of households, the latest data provide further confirmation of a levelling - off at low rates. in the case of non - financial corporations, the subdued levels of production and trade, as well as the ongoing uncertainty surrounding the business outlook, continue to dampen firms ’ demand for bank financing, a tendency which is likely to prevail in the coming months. in this respect, it is worthwhile to note that the growth of loans to enterprises typically only picks up with some lag compared with the cycle in economic activity. at the same time, the ongoing improvement in financing conditions should support the demand for credit in the period ahead. against the background of highly demanding challenges, banks should take appropriate measures to strengthen further their capital bases and, where necessary, take full advantage of government measures to support the financial sector, particularly as regards recapitalisation. to sum up, the current rates remain appropriate. the incoming information and analyses that have become available since our meeting in early october have confirmed our expectations. while annual hicp inflation was - 0. 1 % in october, according to eurostat ’ s flash estimate, it is expected to turn positive again in the coming months and to remain at moderately positive rates over the policy - relevant horizon. at the same time, the latest information continues to signal an improvement in economic activity in the second half of this year. the governing council expects the euro area economy in 2010 to recover at a gradual pace, recognising that the outlook remains subject to high uncertainty. medium to longer - term inflation expectations remain firmly anchored in line with the governing council ’ s aim of keeping inflation rates below, but close to, 2 % over the medium term. cross - checking the outcome of the economic analysis with that of the monetary analysis confirms the assessment of low inflationary pressure over the medium