The following is an extract from a keynote speech by Claudio Borio, head of the monetary and economic department of the Bank for International Settlements, at the Fifth European Banking Authority Research Workshop on "Competition in banking: implications for financial regulation and supervision", held in London on 28-29 November 2016.Is the banking industry stronger than before the great financial crisis?In some important respects, no doubt. Even so, some troubling questions remain, including those raised by widespread market scepticism. Why such scepticism? It arguably results from a poisonous mix of legacy problems and an unfavourable economic environment. Legacy problems reflect, in part, an inadequate policy response to the banking strains the crisis caused. A key feature of the unfavourable economic environment, which no one anticipated even in the aftermath of the crisis, has been persistently and extraordinarily low interest rates - their recent pickup notwithstanding. What could banks, prudential authorities and policymakers more generally do about it? Banks need to work out the right business models without repeating pre-crisis mistakes. In essence, this means pursuing sustainable - and the key word here is "sustainable" - profitability. Given the limited choices available, cost cutting and, in a number of jurisdictions, reductions of excess capacity will be an inevitable part of the solution. For their part, prudential authorities should complete the financial reforms without delay, notably Basel III. And in the process, they should not succumb to the pressure to dilute standards and should redouble efforts to repair balance sheets. Finally, policymakers more generally should work in concert with prudential supervisors to facilitate the needed adjustment, not least by addressing the "exit problem" that characterises the industry and tends to induce, or exacerbate, excess capacity.