under psd2, banks will be obliged to share their customer information with third parties ; such as payments firms. this will result in increased competition in the financial sector with banks no longer just competing with other banks but also with non - banks and financial technology ( ‘ fintech ’ ) firms, which will have easier access to the market. a failure by banks to develop strategies enabling them to realise commercial opportunities arising from psd2 could be a risk to long - term viability, particularly with net interest margin, and risk weight pressures incentivising banks to try to generate more fee income, including from this aspect of their business. fintech is blurring boundaries and changing barriers to entry7. new business models, products and services are emerging, driving competition and changing the way users interact with the system. opportunities for innovation are abundant as, fundamentally, the sector revolves around recording, analysing and interpreting transactions and managing associated information flows. with no physical products to manage, these processes readily lend themselves to improvements via digital technologies. fintech presents an opportunity for the financial sector to become more efficient and generate 3 / 7 bis central bankers'speeches value for its customers. this requires business model adaptation. for example, for retail banks, this may result in a further reduction in the branch network in banks across the euro area. i would ask : how are your firms developing technology to truly transform banking for customers? how are your firms adapting their business models to this innovative and - ever changing landscape? 3 ) regulatory drivers of change the crisis and the monetary, financial and indeed regulatory response, has, and continues to have, a profound effect on banks. from a regulatory perspective a veritable ‘ alphabet soup ’ of regulations, implementing technical standards, accounting and supervisory policies have come down the tracks in recent years. the list of acronyms is long and confusing – crd / crr, brrd, mifid ii, emir, ifrs9, gdpr, trim, psd2, etc. 8 managing and embedding such regulatory change is, i recognise extremely difficult. managing the complexity is, in itself, challenging, and analysing emerging risks across a broad and everchanging financial system is no small task either. some have suggested the pendulum has swung too far, others not far enough. 9 my own view is that given the scale of the financial crisis, radical and far - reaching reform has been required, but not everything has been calibrated perfectly

customer centric, is meaningless if they are not supported by the underlying culture. in other words, the questions that should be most prominent in banks are not ones relating to compliance with regulatory requirements ( important as they are ), but rather : is this sustainable? is it in the long - term interests of our customers? does this fit with our espoused values? is this right? how are my staff incentivised to act? 5 / 7 bis central bankers'speeches conclusion i will conclude here. we live in complex and undoubtedly interesting times. as none of us can predict the future with any degree of certainty, we all need to embrace this complexity, and be as adaptive as the financial services system that we work in is. environmental, cyclical, structural, technological, and regulatory change pressures will continue to drive the transformation of the banking sector. the pressure for cultural change is also sizeable. it is arguably the most important. it is definitively the one that is most in your control. i urge you to act. thank you for your attention. i look forward to the discussion. 1 see esrb, 2016, ‘ macroprudential policy issues arising from low interest rates and structural changes in the eu financial system ’ november 2016. joint task force of esrb advisory technical committee ( atc ), esrb advisory scientific committee ( asc ), and ecb financial stability committee ( fsc ). available here. 2 see, for example, the imf gfsr : imf global financial stability report, ( 2014 ), “ moving from liquidity - to growth - driven markets ”, april 2014 international monetary fund. available here. also, ecb, ( 2014 ) financial stability review, november 2014, european central bank. available here. also, central bank of ireland, ( 2014 ), macro financial review 2014 : ii, november 2014. available here. 3 see imf, 2017, global financial stability report : is growth a risk? april 2017, international monetary fund available here. looking at roe ( 2016 underlying, 2019 consensus forecasts, and management medium - term target ) of us versus eu g - sib, figure 1. 8 shows most us g - sibs should reach profitability targets, but european and g - sibs face significant gaps. 4 see imf, 2017, ‘ european banking systems : addressing structural challenges ’, global financial stability report : getting the policy mix right, october 2017, international monetary fund.