best from each national system without prejudice. progress is under way, including a contribution from italy, and must be continued. rules can contribute to forging the business model for all banks. if the rules change, banks must take this into account when deciding on their identity and strategy. we hope that the uncertainties in the global and european regulatory framework will be dispelled as soon as possible, because banks, especially in italy, must reinvent and redefine themselves ; and do so also in the light of new technologies. technology and its uses are changing fintech is the new buzzword at the centre of any debate on the future of banking. fintech companies make use of existing technology, and of new technology as it becomes available, to offer financial products to their customers that up to a few years ago could only be purchased through a bank. this business is expanding rapidly in the markets for loans, payment services, and financial advice and has managed to attract substantial funding from venture capital and private equity firms : last year such firms invested more than $ 13 billion in fintech. this is still a trifling amount compared with the trillions of dollars involved in global finance, but its growth is exponential. until very recently, the banks benefited from being the main gateway to the financial world for most of the population. by providing a simple but fundamental product like the current account, they were able to reach a vast client base and make profits. today, fintech companies are trying to unpack the bundle of financial services offered by the banks, leaving the latter with only the least profitable ones. fintech uses innovative data analysis techniques ( artificial intelligence and machine learning ) to process efficiently the information that individuals and companies put online, sometimes unknowingly ( big data ). using this data, algorithms calculate the creditworthiness of those applying for a loan and the result is available, on digital platforms not requiring a bank to act as intermediary, to the savers who directly disburse the financing. the method seems particularly profitable when an individual or a small company is asking for a loan : in this case, according to the advocates of fintech, an algorithm based on big data is far more efficient than an office peopled by bank clerks. fintech companies are radically changing the relationship between clients and financial service providers, even in terms of usability. they mainly meet the needs of younger people, enabling them to conduct financial transactions at any hour of the day or night using their

mobile devices. this poses a serious threat to traditional banks. the only factor that keeps borrowers and lenders tied to a traditional bank is trust, based on familiarity with other human beings behind a counter or even based purely on a brand. this is an imponderable factor, one that is difficult to predict. certainly, the banks will have to give much more importance to the digital distribution channels and radically alter the way that client data are analysed and stored. substantial investment in technology and human capital will be necessary. another option for traditional banks is to acquire one or more fintech companies, as seems to be happening with payment services. smaller banks could team up with fintech companies and outsource some of their own business, as has happened in many english - speaking countries. fintech also raises questions and problems for those with a public responsibility as financial regulators and supervisors. there is a risk, for instance, of enlarging the boundaries of shadow banking, that is financial entities that elude any kind of supervision. progress cannot be stopped, but it should be pointed in the right direction in the public interest. we are already considering the best approach to take. the system ’ s transition the financial crisis, the global reaction that widened and hardened the perimeter of banking regulation, the tumultuous developments in technology and in the market and, in the case of italy, the long - standing problems in the structure of the economy require that our financial system be transformed. the changes are already under way, and the system is in a state of transition. throughout the euro area, the banking system has progressively consolidated since the crisis. at the end of last year, the number of banks was just over 5, 000, a drop of 25 per cent compared with eight years ago, while the number of residents per bank branch has grown by more than 30 per cent. in italy, the first figure is in line with the euroarea average, while the second is lower ( 19 per cent ), but nonetheless considerable. similarly, the productive capacity of italy ’ s banking industry is no more excessive than that of the euro area. at the end of last year, the number of residents per bank in italy was about 100, 000, much higher than the average of 67, 000 in the euro area and 48, 000 in germany, even if the number of residents per bank branch was lower : about 2, 000 compared with 2, 300 in the euro area and 2, 600