The future of banking

On June 27th 2017 I was live on BBC Radio Scotland with John Beattie, talking about the future of banking (following a long interview with James Goodfellow from Paisley who invented the ATM 50 years ago). Here’s what I said.

Will there be ATMs in the future?

The question is will there be cash in the future? There’s already a lot less cash being used. We’ve done research with families who are having trouble paying pocket money to kids, becasue it’s one of the only reasons that need cash, so they have to make a special trip just to get it.

Already the only things I use cash for are old fashioned minicabs and bagels. I hardly even use my debit card, I use Android Pay my phone to pay for most things. It’s really annoying to have to carry a cash-stuffed wallet around.

But I suspect cash will be around for a long time yet — too many people rely on cash to avoid paying their full taxes!

What else will change?

Credit cards will disappear soon. It so old fashioned to have to go to the bank branch, to fill out a paper form, then wait a week, to be given a plastic token that represents a pre-approved credit line of £2000 — just in case you need £300 in the future. Instead we’ll be offered only the credit we need, on-demand, at the point of sale, on our phones.

Banks will change, lots of other kinds of companies will offer banking

In the future banking will stop becoming something you DO, and will become a utility that just HAPPENS, that just enables what you want to do. You don’t USE electricity, you just wash the clothes or watch the TV. Likewise we’ll stop ‘calling the bank’ to ‘get a loan’; we’ll just be offered the best way to buy what we want.

Many more brands will offer banking as part of their service. Starbucks are a almost a bank — they hold more cash on their prepayment cards than some banks. But nobody thinks they’re doing banking, they’re just getting a coffee.

Banks will disappear

A new technology called blockchain might mean that we don’t even need banks. Two of the main jobs of banks are 1) to provide secure payment infrastructure, and 2) to be a trusted third party that authorises transactions. Blockchain means that 1) the internet can be the secure payment infrastructure, and 2) that the internet can provide a 100% indisputable verification of a transaction.

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