it are not self - evident. this means that institutions cannot expect their problems to decrease in the future. rather, they must act now – if not yesterday – before an economic downturn sets in, even if there are, fortunately, no signs of that at the moment. the second challenge i would like to talk about is demographic change, which is increasingly making itself felt. the ratio of employed persons to non - employed persons is declining steadily – germany ’ s figures are particularly poor. nor is there currently much prospect of improvement, since birth rates are very low in our country. for banks ’ business models, this entails enormously demanding medium to long - term changes : a dwindling population, smaller economic growth overall, a higher savings rate and less investment and consumption. the change in investment opportunities and customer expectations will confront german financial institutions with completely new questions and problems. even today, the sector is facing strong headwinds from the third major challenge – the lowinterest - rate environment – which is eroding the profitability of interest - focused business models. this challenge is very serious for german institutions, given their rates - driven business models. we can illustrate this challenge with just one simple figure : net interest income currently makes up around 75 % of the operating profit of german banks. a persistent low - interest - rate environment means that a basic component of their business model no longer works : it means, quite simply, that it is no longer possible to earn enough money by focusing on maturity transformation. 3 / 6 bis central bankers'speeches for many years, institutions used the very favourable financial market conditions and their deposit holdings in order to cross - finance their customer services. they were able to offer current accounts free of charge because earnings could be made on the financial market using the money in the accounts. this is likely to be significantly harder in future, since – in all probability – the interest rate level will remain low for a long time. 2 this means that institutions can no longer support their business models with earnings from financial market refinancing, since earnings from maturity transformation will not be sufficient. this requires enormous rethinking. the fourth challenge is digitalisation. although this is by no means new, 3 it has now developed into a broad mass phenomenon which is making ever - greater inroads into our everyday lives – which means it is also increasingly entering the financial sector. why is this such a massive challenge for the business models of banks and savings banks?

to be desired. it is important to make operations more efficient so that economies of scale on the cost side can finally take effect. here, digitalisation can contribute one of its two keys to success : by helping to reduce costs through systematic process optimisation. for example, processes can be rebuilt systematically with the aid of new information technology, enabling them to be organised far more efficiently. 5 let ’ s look now at the second element of the triad : renewal. business models must be rethought and in many cases reorganised, because the economic environment for which they were developed has changed. when undergoing this reorganisation, banks have to master a tough balancing act : returning to a sound business model, on the one hand, and countering new and innovative fintech rivals with innovations of their own, on the other. i have already mentioned that earnings from maturity transformation will not be sufficient. this means that the low - interest - rate environment is weighing additionally on interest - focused business models. but it is not just these institutions which should consider whether they can charge fees for the services they perform for their customers – as, after all, other sectors of the economy do. the second digitalisation key can also assist the reorganisation process : to a limited extent, this can help to tap new sources of income. institutions can tap such new sources of income and use existing sources more efficiently by cooperating with fintechs. this might make the balancing act easier to accomplish. completing the triad is a moderate, structural scale - back of capacities in the banking sector and its adjustment to customer demand. ultimately, revamping the institutions and increasing their efficiency will expedite this structural change. the result : capacities and structures which meet the needs of the real economy. 6. conclusion ladies and gentlemen the banking sector may not arouse the same sympathy in us as the giant panda – bankers simply do not have such fluffy fur. even so, fortunately, like pandas since the recent announcement, banks are not under threat of extinction. the efforts at reform since the financial crisis have already had some success. but banks and savings banks are in danger of being supplanted unless they carry out further reforms. this is the only way for them to survive in the long term in the changed economic climate. in order to keep pace with economic evolution, market participants will develop a multitude of strategies – some successful, some less so. ultimately, all institutions will develop different versions of the triad – but in