What might digital banking unleash?
Are we becoming more exclusionary as we march down the path toward completely digital banking? The debate around cash has been heating up lately. The city of Philadelphia and the state of New Jersey have recently passed bills that ban stores from going cashless, arguing that the concept marginalizes consumers who are unbanked and do not have access to credit or debit driven accounts, including low income and immigrant households. Similar legislation is being considered in Chicago, New York, San Francisco and Washington, D.C. Perhaps sensing a rising tide, Amazon just opened its first Amazon Go store in New York City and is accepting cash.
Outside of the U.S., from India to China, and Sweden, we have seen varied efforts in curbing the use of cash in favor of digital payments. In fact, mobile payment transactions in China in 2018 exceeded that of all the plastic cards in the world, with 90 percent coming from Alipay and WeChat Pay. Alibaba alone reported US $30 billion transactions on their Singles Day (November 11) in 2018, which is more than Black Friday and Cyber Monday combined.
As technology continues to reduce friction, banking will become more embedded in our day-to-day life. A bank as we know it might look very different than what it does today – and we may no longer need a physical branch to service most of our needs. Recent market entries such as T-Mobile Money illustrates this point: a telecom wireless provider leveraging technology to enable consumers to conduct financial transactions. But this is just the beginning. What is a bank and what does a bank do will most likely continue to evolve in the years to come.
It is estimated that the entire digital universe is expected to reach 44 zettabytes by 2020. How will our financial future be re-imagined with such an abundance of data and unparalleled computational power? Will machines be able to predict what we need and when we need it, based on our behavior and historical data? What insights will the virtual assistants be able to gleam from our conversations? Will technology help us make better decisions and enable us to attain a more secure financial future? Will the bottom 10 percent finally be able to access the same services as the top 10 percent?
I told our 9-year old one night that if we were to go completely cashless, the tooth fairy would not be able to give him money anymore. To which he responded: “Well, the tooth fairy could always put money in a prepaid card.” Perhaps the world is more prepared for cashless than we thought.
As Brett King wrote: “The bank account you have today will have long disappeared in favor of something that’s a lot smarter and a lot better for your day-to-day use of money, saving for the future and providing for your family.”
Isn’t that a future we would all want?
Listen in to our conversation with Brett King, on our new episode of The Red Envelope on iTunes and Spotify, as we talk about the future of banking.
See more articles by Theodora here
— Theo (@psb_dc) May 13, 2019
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