The writing is on the wall for the concept of physical cash. Sure, it may have served us well for the past several centuries but in a digital age, cash is becoming obsolete at such a rapid pace that the only way our children’s children will ever get to see coins and notes will be in a museum.
At least, that’s likely to be the case if Apple CEO Tim Cook is to be believed. Speaking this past November at Trinity College in Dublin, Steve Jobs’ successor boldly predicted the death of cash, telling students ‘your kids will not know what money is.’Of course, we could always dismiss Cook’s claims as merely marketing propaganda; he was, after all, speaking to Trinity students to promote the launch of Apple Pay, the contactless payment system serving as an alternative to paper and sterling in over 250,000 shops and counting.
To do so however, would be to ignore the fact that there are many others out there without Cook’s agenda who backup his statement. In an August 2015 survey carried out by Lloyds Bank, 39% of those questioned believed that they would not need cash at all in a decade’s time. For Lloyds and their fellow retail banks, this kind of news could come as something of a tough pill to swallow. Surely the death of cash would also spell the death of high street banking branches where the majority of activity still revolves around processing and managing cash transactions.
If Lloyds and their ilk were far from on the ball, it could well do, certainly, but something tells us that isn’t going to be the case. That something? This, from Lloyd’s Bank Head of Personal Current Accounts, Claire Garrod: “People are increasingly expecting to use new technologies to make payments rather than rely on cash. The benefits of these new developments are gradually being understood and embraced by banks and their customers, to make payments more convenient without compromising security.” (link)
Ms. Garrod’s statement, taken from the press release which accompanied the publication of the Lloyd’s August 2015 survey, is perhaps typical of the current mindset of many of our banks: it’s time to evolve.
To evolve successfully in a climate where the worlds of finance and technology are rapidly merging, outfits like Lloyds, Barclays and their competitors should now be channelling their efforts into joining forces with the big name players in the FinTech sector. One of the most talked-about industries of the last several years, so-called FinTech Unicorns (startups valued at more than $1 billion), have attracted some serious investment as of late as they continue to find innovative new ways to help every day consumers manage their finances. Investment specialists estimate that this kind of high level funding is only going to increase over the coming 12-18 months, ultimately putting new ventures like credit processing firm WePay alongside successful financial tech veterans like financial software specialists Misys and posing what – on the surface at least – seems like a serious threat to banks.
Over in the United States for example, global investment bank Goldman Sachs recently predicted that further FinTech innovation would “steal” around $4.7 trillion from the coffers of retail banking, not that financial technology and the banking industry need necessarily approach the continued evolution of both sectors as a case of “Us vs. Them.”
Indeed, whether the untimely demise of money really is nigh, or whether it will still exist in some reduced form, the move to contactless payment systems like Apple Pay represents not the end, but the beginning of a new way that both sectors can ultimately achieve their primary purpose: serving customers. And that brings us back to our earlier question: Will the move towards greater innovation in financial technology ultimately render retail bank branches obsolete?
As Nic Merriman – CTO of Financial Services at Avanade UK – predicted in an article for Media Planet, branches are still likely to be around albeit in a much different role from the days of housing and processing cash transactions. Instead, Merriman suggests that the branch of the future will deliver services primarily through smart devices, with “customers given access to information and services they can interact with on the go.” In other words, whilst Tim Cook’s bold predictions may yet come to fruition over the next ten years, we wouldn’t start dusting off those funeral suits to mourn the demise of the modern bank any time soon.