The most important principle in hitting a baseball is to "keep your eye on the ball." Otherwise, you probably won't hit it. In the financial world, the ball is the marketplace. And like a Nolan Ryan fastball could change how a baseball game was played, technology is changing how banking is done. This is not the kind of technology-driven change that allows bankers simply to conduct their business faster and more efficiently so that they can boost their earnings, as they have in the past. What is underway now is a revolution in technology that is fundamentally changing banking relationships. The question here is not so much what this revolution will do for banks, but what it will do for their customers. If you look behind the traditional facade of banks and thrifts, you find they are really information processors. They transmit, aggregate, assemble and assess information from those who have money to lend to those who want to borrow it. Bankers are in the information business, and no business is more affected by technology than the information business. The technology revolution undoubtedly will go well beyond what we have experienced to date. I foresee a day when investors/saversofrom your next-door neighbor to national pension fundsoelectronically put their money directly into a slew of "capital pools," filled with mutual funds, bank products, stocks and new products marketed by investment bankers. Would-be borrowers interested in these capital pools may log on to a PC and "access" a pool that matches the borrower's needs/ assets/background. As such new developments occur, bankers will have little choice but to adapt to them. New technology already is altering the financial services marketplace. It is directly linked to the financial modernization deliberations that are commanding so much attention in Congress. Though currently we do not face a technological third strike, there is no better time to address it than now. While banks and thrifts are financially strong and the economy is in generally good condition, ultimately, we will be tested under less favorable conditions. As the debate unfolds on financial modernization proposals, among the key issues that must be addressed are these: One, how do we, the financial services industry, including regulators, organize ourselves; two, how do we regulate ourselves to ensure safety and soundness protection at our insured depository institutions and to provide adequate undergirding of a tested and resilient infrastructure; and three, how do we preserve and enhance what is, from my perspective, the best housing finance system in the world? There are no easy answers to these questions, nor are there simple solutions for coping with the new technology, which is all the more reason to begin addressing these critical matters now. Since bankers and other financial service providers are so affected by technology, it behooves them to become an integral part of these deliberations. Banks cannot leave it to Washington. The government should not dictate who the players will be and how they will be positioned. The marketplace, with its competitive and technological dynamics, can and will accomplish that much more efficiently.

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