The talk of paperless or cashless society has been around since the 1990s and the internet, 3D banking and digital currency (i.e. Bitcoin, Litecoin, Primecoin, etc.) are fomenting its emergence. Paper money might soon be phased out by 2043 according to experts.
I’ve just learned from a website for bank and credit union marketing executives called, TheFinancialBrand.com, that at least 1 credit union in Ohio and 1 bank in Texas are currently testing 3D video banking. Three-dimensional video banking or 3D banking is like video conferencing (i.e. Skype, Google Hangouts, etc.), except the creators of this technology utilizes holographic imaging tools to make it look as the bank executive is a living, breathing person sitting across from you. They also add dynamic audio systems so that the person seems he’s/she’s inside the room with you. You’ll be glad to know that you’ll be interacting with a real person, only that he/she is miles away from you, so the whole experience is not that different from talking to a real person in on the street or elsewhere.
A Possible Cashless Society in the Near Future?
Banking and managing money isn’t what it used to be. During the decades that ran through the 1970s and the 1980s it was the ATM that was all over the news. Meanwhile, online banking was the thing between the 1990s and the first decade of the millennium. Today mobile banking is the trend, but even before this decade ended virtual banking started to emerge.
Mitek Systems Inc., a San Diego-based technology company, on September 10 and 11, 2015 debuted their Mobile Photo Account Opening product at Finovate Conference at New York City. The app allows you to create a bank account in 60 seconds or less and all you need is to take a photo of yourself, the front and back of your driver’s license; then you can choose between a checking, savings or credit card account.
Here are some predictions for banking and finance and with the integration of advanced technology into the system.
Within 10 years. “The economic payments system will begin to ‘know us,’ either through biometrics, optical sensor or facial recognition,” says Joshua Siegel, managing principal of StoneCastle Partners, a New York-based asset management firm that invests in banks.
Biometrics Will Replace PINs (Personal Identification Number) and Signatures
Siegel’s prediction is starting to take form with current technologies such as the iPhone 5S’ fingerprint scanning feature which can unlock the phone; it may soon be used to do banking transactions. Some companies like Barclays and a few others work on the other end of the spectrum and use voice recognition programs to identify customers and respond to their needs accordingly. Biometrics and similar security measures ensures anti-identity theft issues people currently have with plastic digital cards like ATMs and driver’s license. These innovative systems are actually existing now, but they ares still either in research and development stage or testing stage, so it may take a few more years before we can enjoy using them.
Diebold, Inc. from North Canton, Ohio, recently unveiled an ATM that is designed to be compatible with smartphones in the International Consumer Electronics Show back in 2013, so no, ATMs aren’t going away anytime soon. I think that this $3 billion software and technology company is certain that digital currencies will work with banks and ATMs even in the farthest future. The process goes like this, you start the transaction from your smartphone, then the bank will give you a one-time code and you go to the ATM and use that code to retrieve your cash. This security scheme is good because it keeps your identity secured and is far more efficient and safe than PINs as Diebold points out.
But not all banking changes will be of the gee-whiz-isn’t-that-cool variety. “The banking industry will likely undergo significant changes over the next few decades,” says Jeff Varisco, vice president of insurance services at American Equity Investment Life Insurance Company, headquartered in West Des Moines, Iowa. He believes that in industrialized nations, there will be more regulation focusing on solvency and the “too big to fail” problem.
Will we even notice? Varisco thinks so. “These efforts will cause the industry to move toward consolidation to a handful of large, national and international banking institutions thereby limiting the ability for banks to develop and offer products specific to regional and local needs,” he says.
Virtual Tellers, Multiple Access Points from Handheld Devices and Other Mediums for Banking Transactions
“Within 20 years. At this point, nobody will use a teller for something as simple as a deposit or withdrawal,” says Maclyn Clouse, professor of finance at the University of Denver’s Daniels College of Business. “There will be no teller lines at banks, but loan requests and paperwork for the loans will still exist because of all the regulation. Banks may still have some face-to-face activity for investment products,” Clouse says, adding that it will probably become as commonplace to do banking through a TV as it is now through a PC, tablet or phone.
That said, “The biggest threat to all of these changes is the lack of security. If hackers can access accounts, there will be significant consumer pressure against the technological changes,” Clouse says. “Unfortunately, our current evidence suggests that the hackers are one step ahead. They seem to come up with new ways to hack.”
According to associate professor of marketing at the Villanova School of Business in Villanova, Penn, Eric Karson; although paper statements, receipts and mail from your bank will probably be close to nonexistent by 2033, we’ll still probably get paper money from banks. This prediction is easy, he says, and you don’t have to be a psychic to figure it out.
“There are huge cost savings to be realized with digital currency,” Karson says, “but countering all this is consumer resistance to change. The act, not the coin,” he adds.
But Karson does believe that 20 years from now, paper money and coins may be closer to extinction than ever, in part because the cost of producing currency will continue to climb, and customer resistance is bound to eventually weaken. “As time passes, more and more consumers will be more comfortable with all things digital. Today’s kids will grow up. There will be less and less separation between their digital life and their life in general,” Karson says.
It Still Comes Down to a Toss of a Coin in the End
Within 30 years. “People will pay for goods and services by sending wireless signals to sellers through wearable computers. The payments will be authenticated through the DNA signatures of all parties to a transaction,” says Peter Cohan, who teaches business strategy at Babson College in Wellesley, Mass., and has his own eponymous management and venture capital firm. And by this point, he believes, “Cash and credit and debit cards will be history.”
Which could have an interesting ripple effect, Clouse says. “If cash does go away, an interesting question is what happens to what are now illegal activities involving cash; for example, drug deals on the street corner, prostitution, et cetera,” he observes.
However, will all the predictions and possibilities, it may not pan out like we said it would and there is a remote possibility that someone in 2043 will read this blog and check his wallet only to find full of paper cash (either in US Dollars or Chinese Renminbi). How do we know this? Well, because President Jimmy Carter, 34 years ago, once made the initiative to modernize paper currency and use plastic ATM cards. We found out 2 things from President’s Carter’s task force of 1974: 1) it didn’t work, and 2) paper money is still the best option for trade and commerce to this day.