to adapt to the new digital ecosystem. if banks are to remain as the core of financial intermediation, they must retain customers, now increasingly susceptible to be poached away by non - banks offering cheaper, more convenient services. to do so, they must move with the times. this was very much at the back of my mind when we empanelled a task force to examine the terms and conditions in banking contracts in response to growing customer complaints. a report containing 100 recommendations for improving the bank - customer relationship is currently under public consultation. while the need for a fair and inclusive banking sector is the raison d ’ etre of this report, we also want to drive home the point that the long - term survival of banks rests on the extent to which they are able to place the customer at the centre of their business. banks must work with their customers, not against them, and look for win - win outcomes. this is the “ burning platform ” i mentioned earlier which pits traditional banks against new entrants in financial services, offering peer - to - peer lending, crowd - funding, and cheap settlement in cryptocurrencies, amongst others. innovation is key. it will emerge as the single most important factor driving sustainable topand bottom - line growth in banking. innovation is not just the provision of new products or the creation of a new customer experience. it goes beyond this. it implies doing things differently right across the entire business model. archaic structures need to be dismantled, and old mindsets discarded, to create a new, nurturing environment. consolidated it platforms will provide the launch pad for new successive waves of change. digital banking will force - feed change in back - office procedures, payment and clearing processes, and bank documentation. one example among many is trade finance documentation which is changing very rapidly to adapt to the world of e - commerce and e - tailing. implications for the regulator what about the regulator in all this ferment of change going on all around us? the bank could hardly stand by as a spectator. we have been preparing for transition to a new business era. we are rejuvenating our staff, renewing and updating our skills set, and rolling out new rules and regulations. we have inducted a director of technology in the highest echelons of the bank. coping with the “ bank different ” credo of afrasia has itself been a learning experience for the bank! we must continue on this path, enhance our supervisory

to compete away any momentary advantage resulting from this move. age of digitalisation banking is in a state of flux. this has little or nothing to do with the financial crisis that has rocked the industry and put both banks and regulators on the firing line. it is the result of the continuing digital revolution, building successively on the transistor, the microchip, faster and more powerful computers, broadband connectivity, cloud computing, smartphones and other communication devices. the media and entertainment industries have borne the brunt of the digital revolution so far. it may now be the turn of the banking and payments sector to benefit from a similar radical transformation. paul volcker, former chairman of the us federal reserve, once said that the last truly great financial innovation was the invention of the atm : “ it really helps people, it ’ s useful. ” what would he say about what we are unveiling today? this goes beyond cash and payment transactions of the atm, and transforms the entire banking experience. conditions are certainly ripe for such a transformation here in mauritius. with a mobile phone penetration rate of 121 %, of which 35 to 40 % are smartphones, mobile banking is set to lead the way and take us to the brave new world of digital banking. bis central bankers ’ speeches customer behaviour and expectations what is driving this transformation in the delivery of banking services? pressure to lower the costs of financial intermediation is obviously a powerful driver. changing consumer behaviour and higher, more demanding, expectations are even stronger push factors. the biggest driver is, of course, technology. the digital ecosystem, now in the making, can disrupt – and even dislocate – myriad activities, traditionally dominated by banks. how are banks responding to this? the banking industry finds itself in the delicate position of the proverbial cat on the hot tin roof. it stands on a “ burning platform ”, red - hot with technological innovation, and attracting intense competition from mobile operators, internet companies, and many others occupying adjoining space. bankers must not only defend their territory but also need to venture out to take on their nimble challengers. their long - term survival depends on how well they respond to the growing expectations of consumers. as consumers become more confident in the use of the full range of current digital banking offerings, banks must be constantly on the lookout to offer products more tailored to individual needs. in the process, banks need to re - engineer outdated approaches and procedures : they must re - invent themselves