“ the value of the lei for identification in digital processes ” speech by klaas knot at the gleif meet the market event 2020 amsterdam, 4 february 2020 this meet the market event was hosted by the global legal entity identifier foundation ( gleif ) and organized in coorperation with dnb. in his opening address, klaas knot outlined the background to the legal entity identifier ( lei ), and described the valuable role it can play in managing financial risks and enhancing the quality and accuracy of financial data. mr knot also emphasised how authorities and market participants alike can reap the benefits of more widespread adoption of the lei. good afternoon, and welcome to 5 - 4 - 9 - 3 - 0 - 0 - 1 - o - 3 - 6 - c - v - k - p - v - l - 2 - d - 4 - 8. in other words, welcome to de nederlandsche bank. of course, it is easier to call this place by its name. and not by its 20 - character alpha - numeric code. but the legal entity identifier – in short, lei – is a valuable initiative and that is what we are here to discuss today. before we do, let me share a bit of background, from my perspective about how and why the lei was developed. and how you can play an important role in further expanding its use. thereby making the financial system a little bit safer one lei at a time. like many other regulatory innovations, the lei was born out of the global financial crisis. the years leading up to the crisis saw a diverse range of legal entities trading on financial markets. many of them were also part of much larger firms, even though this was not always clear. these financial conglomerates combined many different structures and activities. and they operated across many different jurisdictions. but they also lacked transparency and stability. lehman brothers was a prime example of this : a patchwork of cross - border and cross - entity interdependencies. lehman ’ s insolvency resulted in over seventy - five separate bankruptcy proceedings. when it collapsed, the group was party to over nine hundred thousand derivatives contracts. when the crisis hit, it was unclear which party owed what to whom. the resulting insecurity caused even more panic on the financial markets. the root of the problem was the large number of legal entities, scattered across the world, with no uniform international method of identification. the lei was therefore introduced

new technology and new players will change the role of banks. our gunpowder challenge is fintech, and especially bigtech. the influence of bigtech firms in banking is growing rapidly. i am sure at least some of you are already using apple pay or google pay. banks are increasingly outsourcing to the cloud. and banks and bigtechs are joining forces in sme lending. for example, a bank starting to offer loans to merchants active on a web - based platform, using transaction information from that platform. the entry of bigtechs makes banking an industry ripe for disruption. i think we should not fear this new challenge. i am not one of those who believes bigtech will tear down the banks. but i am convinced that bigtech will change the rules of the game. how exactly will partly be determined by the strategy of bigtechs. will they choose cooperation or disruption? but it will also depend on the innovative power of financial institutions : on their vision and strategy, their capacity for change, their ability to attract talent. financial institutions have already innovated successfully in some cases, and they have to continue doing so in the future. so my message to banks is : innovate. if you succeed, you will be able to shape innovation in financial services. if you fail, you may find yourselves in a dependent position. the rise of bigtechs in the financial sector also has implications for regulators. first of all, we will have to seriously challenge banks on the sustainability of their business model. and what does the rise of bigtechs in the financial sector mean for 3 / 4 bis - central bankers'speeches concentration risk and systemic risk? we have worked for years to solve the problem that many banks are too - big - to - fail, and now bigtechs are entering the scene, raising similar issues. the recent outage of whatsapp offers a stark reminder of what could happen if crucial technological infrastructure fails. existing regulation may need to be adjusted to address these risks. supervisors at european level and beyond will have to team up to prevent gaps, conflicts and overlap in regulation. not only across borders, but also across areas of competence and expertise, such as cybersecurity, data protection, competition and financial supervision. one of the great things about the norman conquest of 1066 is that after that britain was never invaded again. some see brexit in that historical context. as is clear from the topics of the panel discussions earlier today,