English 4.0
The future of money
Banking is necessary. Banks aren’t,” said Bill Gates almost 30 years ago. We don’t have to believe everything American software tycoons say about money, but when someone has a net worth of $97 billion (about €86 billion), as Bill Gates does, maybe we should listen to what they think. The idea that banks might not be necessary moved closer to reality in September of last year, when Commerzbank lost its status as a blue chip. Deutsche Börse said that it was kicking the bank off the DAX list of Germany’s top 30 public companies, and Commerzbank was replaced by a company called Wirecard.
Now, if I were to write “Commerzbank” on a piece of paper and show it to people in an English-speaking country, I’m quite sure that many of them would see a connection between “commerce” and “bank” in that word and they’d say “Commerzbank” was some kind of financial institution. But Wirecard? What does that mean?
Wirecard is a “payment service provider”. Or, in a word: a fintech. Or, in a definition: a company that uses new technology to compete with traditional players in providing financial services.
And Wirecard is a very profitable fintech. “Wirecard reports 35 per cent revenues increase in third quarter,” announced Reuters at the end of October 2018. That 35 per cent increase in revenues amounted to €549 million.
The Fourth Industrial Revolution that I write about in this column isn’t just about smart factories and the internet of things. Industry 4.0 is disrupting every
“The Fourth Industrial Revolution isn’t just about smart factories”
business, and now that it has reached the money in our pockets, each generation needs to understand what’s happening.
These generations are the Silent Generation, which loves its cash; the Baby Boomer Generation, which loves its debit cards and credit cards; and the Millennial Generation, which loves its… phones.
Does this mean that cash is no longer king? Not quite yet, but if you go to Scandinavia, you’ll see the future of money in action. In 2016, just one per cent of payment transactions in Sweden were done with notes and coins. Swedes are using the “cash cloud” to pay for almost everything.
Quite simply, people now want payment methods that are fluid and fast. For millennials, it’s all about mobility and being able to access money 24/7. Their phone apps allow them to pay for a coffee, as well as manage their financial affairs, in a way that works regardless of country or time zone.
Cashless banking is conversational, which is important for the “always on” crowd, because people in their 20s aren’t as concerned about privacy as people in their 50s. It’s also about having a certain kind of equality among friends, where you can’t see whether someone has 50 euros or 50 cents in their “purse”.
The coming disruption of money will be difficult for those who love cash and cards. Not everyone has a smartphone or can afford one, and not everyone has children, grandchildren or nieces and nephews who can explain how the new technologies work. In the coming years, the person paying with cash or cards will appear increasingly old-fashioned and, because none of us wants to look foolish, this needs to be talked about now. I’ll be talking about it here again later this year.
“People now want payment methods that are fluid and fast”