SPEECH DATE:  4 June 2018  SPEAKER:  Stefan Ingves  VENUE:  Stockholm School of Economics  SVERIGES RIKSBANK SE-103 37 Stockholm (Brunkebergstorg 11) Tel +46 8 787 00 00 Fax +46 8 21 05 31 registratorn@riksbank.se www.riksbank.se  Money and payments – where are we heading? Today, I am going to talk about money. This is a subject that concerns us all – most of us use money practically every day. But we probably don’t give much thought to how important it is that our daily purchases can be carried out smoothly. It's more or less the same as not giving so much thought to your health as long as you’re healthy. But once you get sick, it becomes almost the only thing you can think about. Our system for payments is similar; as long as it works securely and efficiently, we don’t think about it. And, to continue the analogy: It is the Riksbank's task to ensure that the payment system remains healthy and contributes to a well-functioning society. Right now, we, at the Riksbank, are devoting a lot of time to issues regarding payments and the payment system. The background to this is formed by the rapid changes on the payment market and the rapid decrease in cash usage in Sweden – a development that we are practically alone in, worldwide. Only a few other countries are undergoing a similar, albeit less dramatic, development.
However, not all incumbent banks are able to fully bridge the technology gap, particularly for newer services; d. This results in migration towards digitally-focused challenger banks such as Atom, Fidor and Monzo that will provide similar services of traditional banks, but utilise technology to deliver faster and cheaper services that better meet the needs of customers; and e. The implication of this is that the landscape of finance will remain largely filed by banks, but a new breed of purely digital banks will gain in significance. The names that we immediately think of for financial services will change from the current banks that we are so familiar with. The fourth scenario is what I call ‘the Tech take-over’ a. Like scenario one, this is a more extreme and less probable scenario, but still one that is worth a thought. In this scenario, technology adoption by incumbent banks is low, with a high level of fragmentation among finance providers; b. However, in contrast to scenario three, technology firms enter as the new preferred provider, successfully capturing the loyalty of consumers due to superior ability in using data to deliver customer-centric solutions; c. Financial services will thus be offered via a wide range of providers such as social networks (e.g. Facebook, Wechat) and e-commerce platforms (e.g. Amazon, Alibaba); and d. Growing comfort with the ability of technology to ensure secured transactions also gives rise to the popularity of peer-to-peer financial services.