##s on the securities that it purchases under repo. this is relative to the banks'final estimates of net cash outflows under the lcr stress scenario using data on their balance sheet position as at the end of the relevant year. this compares to the clf banks'annual operating income of around $ 100 billion. bulletin, september, © reserve bank of australia, 2001 – 2019. all rights reserved. the reserve bank of australia acknowledges the aboriginal and torres strait islander peoples of australia as the traditional custodians of this land, and recognises their continuing connection to country. we pay our respects to their elders, past, present and emerging.

are not able to simply pass on the higher cost of deposits to borrowers. as a result, in the scenario there is a marked squeeze in banks ’ net interest margins and hence on banks ’ revenues. the scenario also poses a number of risks to banks ’ market share, to the liquidity of retail deposits, to fees from payment services and to the ability to retain and access customers and to the use of their current data advantage to cross sell products. if firms are depending more on technology like the cloud and third party providers, this environment could also pose cyber and operational risks. the impacts are not of course all one - way. there is an upside for existing banks. new technology and customer relationships gives them the opportunity to provide customers with new and better products and services, to compete and, crucially, to become more efficient. all speeches are available online at www. bankofengland. co. uk / speeches in their responses, the banks in the test judged they could maintain existing business models without increasing overall risk taking, meeting the requirements of both regulators and investors, and using technology to increase efficiency to offset lower margins. our assessment was that there were a number of risks to the banks ’ projections in the exploratory scenario. in particular, open banking, psd2 and other related changes might cause greater and faster disruption to business models and the forecast increases in efficiency may be more difficult to deliver than assumed. investors might also demand a higher return than banks ’ forecast in the exercise. the bank of england ’ s 2017 exploratory scenario was not a pass or fail stress test. it was an exercise designed to assess the level and depth of banks strategic thinking about responses to future challenges, including the challenges to core business models from changes underway in the technologies around money. the exercise provided the financial stability and the prudential regulation committees of the bank of england with a number of important insights. we will be following up with banks on the results of the exploratory exercise. conclusion thinking about the future in this way is a key part of our responsibility for the money of the uk. the way we use the social technology of money has a long and very varied history. money has manifested itself in very different forms over the centuries. the confidence that lies at the heart of the technology that is money has been supported in very different ways. the technology has, on occasion, been abused and misused : to borrow mill ’ s analogy, the ‘ machine ’ has