. * * * in the 1970s and 80s, finland saw substantial investment in it in the financial sector. but it was only after the financial crises in the early 1990's that the sector was forced to revise their operations, and ict was widely used in both re - engineering the internal processes and in creating new distribution channels. in the ten years that followed, banks cut their operating expenses by 50 %. this process was initiated when public authorities set stark quantitative cost savings requirements as a condition to receiving capital support. on top of which, enhanced competition, due to deregulation, has increased the need for continuous re - engineering. certainly, commonly created standards for customer - to - bank and interbank communication also played a significant role in this development. from which we can see that we need it - investment, we need competitive pressure and we need investment in innovating in the organisation to bring about productivity growth. now – and even more so in the future – tough competition in integrating markets force financial market institutions to further improve their performance and increase their efficiency. that is also what share holders want. and to bring these improvements about, streamlined inter - bank payment systems and automated securities settlement systems are required in particular. the european financial sector demonstrates, however, significant differences in efficiency, both between institutions and between national banking sectors. this question will be further elaborated in today's presentation by de nederlandsche bank's jacob bikker, the author of a well - known book in this area. implementation of ict has caused profound changes in many business lines, and yet there is the potential in further renewing and streamlining the processes – it should not be about carrying out the computerisation of old processes but rather about reinventing the processes and using the full capacity of new technology. efficiency comes from savings in personnel and time, streamlined and automated process flows, from less errors, from economies of scale and from lower processing costs per unit. banks have created new sources of income by offering more sophisticated products which would not have been possible without the use of ict. the whole banking landscape is changing. it is going to be of the utmost interest to hear bob deyoung's presentation on what the implications of these changes to the industry are, and how far this evolution can go. a modern, networked economy also requires financial institutions to review their way of carrying out their business with their customers in order to produce added value. this often requires being part of their customers'business processes and doing

more than was required of them earlier. an example of this is electronic account statements, with their structured references and other information for automated booking and reconciliation in the company's financial management. the demand for straight - through - processing from customer to the bank, between banks and to customer is intense. aspect of these issues will be discussed during both bo harald's and david blair's presentations in this seminar. * * * from bricks and mortar to clicks and mortar is the most visible phenomenon of ict in financial institutions a new distribution channel, the internet, and mobile terminals, along with sufficient atmand payment card networks have made it possible to bring down the number of bank branches, giving savings in operating costs. take, for example, one finnish bank which has managed to cut its distribution costs by 25 % and unit production costs for payments by 68 % over a 3 year period. this was achieved by implementing multi - channel applications. customers have adopted the new way of banking, paying bills, checking credit card balances or trading in securities, independent of time or place, surprisingly fast. coming generations will probably have difficulty in understanding how anyone ever queued at a bank branch to pay his bills – to say nothing of writing a cheque. today, it is difficult to see how a bank could enter the finnish or nordic markets without a well - functioning and comprehensive internet service. new customer generations are also more willing and capable of extensively managing their finances using e - banking services. housing loans, for example, are still largely negotiated in branches, but already we have seen how people request offers from various banks via the internet before entering into final discussions with one bank. this reinforces the customer's negotiating power. and this increases competition. development also requires sufficient security elements to create and maintain public confidence. and here the challenges are growing. we need european level cooperation in network security. here i hope that enisa, the european network security agency, will make its contribution. we need efficient cooperation among the law enforcement authorities to fight cyber crime. and we need the secure electronic identification and protection of data privacy. identity theft, the worst case of e - crime, must be fought on all these fronts. ict implementation and exploitation often require huge investments. in many banks ict has replaced personnel as the largest single item of expenditure. old legacy systems are aging, and according to a recent survey, over 80 % of ict expenditure goes into maintenance of these systems. new investment is required, and these are challenging projects