What does the bank of the future look like?
Banking is moving into a new high tech universe. Like many other aspects of our lives the digital revolution is about the change the way we bank. We may even use Snapchat, Facebook, Instagram or other social media platforms for our banking with the traditional bank relegated to providing wholesale services.
Here is what I think:
Banks have got us by the short and curlies.
Whichever way we turn there are fees, fees, and more fees. The mainly Aussie-owned banks keep their shareholders very happy with all the profit they earn from us. Sometimes it even feels like they have an intravenous line hooked up to our wallets. We get hit when we go overseas with fees at both ends to withdraw our money. What’s more there are overseas margins charged on transactions we make when we buy in person overseas or via the internet.
What about banking of the future?
Well, overseas there are banks offering services that are light years ahead of what we have here in New Zealand. Take Monzo bank in the UK or Simple in the US. Instead of a traditional bank account as your home screen you view your money through your budget as a landing page and can see how you’re tracking for the month. They allow you to set targets for monthly spending, show you at a glance what’s safe to spend and send notifications when you’re spending too quickly. Imagine that?
Yeah. Let’s get going.
Hold on there. Monzo or other banks can’t just set up shop in New Zealand. They need to get a banking or non-bank deposit taker licence from the Reserve Bank of New Zealand, which involves jumping through more than a few hoops. But never say never. We will get this type of service eventually from our existing banks or quite likely from a nimble start-up.
Do I even need a bank?
Quite right. In the future we could do our banking on our social media account. Why can’t our PayPal account or Apple Pay, Android Pay, Samsung Pay, or even Alipay from Chinese giant Alibaba. become our banks? We can already, for example, send money to others via PayPal if we have their email address. With their reach, social media platforms such as Facebook, Snapchat and Instagram can run banking type features. In the US you can already send money to a friend via Facebook Messenger. All you do is open a message, tap the $ icon and add your debit card to send the money. There are other peer-to-peer payments systems. In China WeChat offers financial services and some say there’s a battle raging to become the WeChat of the West.
What about Bitcoin and other crypto currencies?
Bring it on. I can’t wait until I can go on holiday, to say, Brazil, walk into a local change house and swap the equivalent of $NZ100 or $NZ500 of Bitcoin for local currency for a few cents charge. This is already happening on a small scale. An example I’ve come across is Filipino workers in the United States who send Bitcoin back to their families, who then cash it in locally. And in the US there are Bitcoin ATMs, which allow you to withdraw your Bitcoin in local dollars. Bitcoin doesn’t need a bank and can be managed on your smartphone.
But what about now?
You’ll have to hope that someone has the balls to open up a Monzo equivalent in New Zealand. With a service like this you can use your account abroad with no nasty charges, which is amazing for regular travellers or those who want to transfer money to friends, relatives and others overseas or buy online.
It won’t be long before banking gets a whole lot more efficient in terms of time and cost.
Banks are quaking in their boots. They could be the next industry to get the digital goodbye kiss. The reality is that we may not even need banks in the future. They’re just middlemen and that’s something that digital technology can do. Right?
