PR Place quoted me and my recent blog post on the future of cash in their weekly summary:
https://www.prplace.com/blog/posts/2018/december/this-week-in-pr-21-december/
Showing posts with label money. Show all posts
Showing posts with label money. Show all posts
21 December 2018
18 December 2018
Blog post: Going, going, gone: the future of cash
I love thinking about my 1980s family holidays in Italy. Weeks spent on beaches, in ice cream shops, pizzerias and gaming arcades. Phone calls back home were strictly kept to three minutes as they were so ridiculously expensive. Everything was paid in cash. I remember how excited I felt when I was a Lira millionaire. It was exotic and precious.
As you can see, I have a very emotional attachment to cash. I like that I have much better control over how much I spend and that my children can use to learn how the financial system works. But I do not think that cash is very practical. I actually very rarely have cash with me. At a fun fair a few weekends ago, I had to hurry 10 minutes to a cashpoint and back so I could buy tokens for the rides, as the organisers did not accept cards. Without enormous pressure from various children, I would have walked on for sure.
I do not think cash is safe either. The number of people I personally know who have had cash stolen from them is in the dozens. Including myself. The number of people I know who had their bank card stolen and money taken from their account is – one. And their bank paid back the money within days as it could easily spot an unusual spending pattern. So if carrying cash is more risky, would it not make sense to get rid of it? It is exactly what Sweden does. But going completely cash-free is politically sensitive.
Cash does have its prize
Governments keep cash alive because it is a social method of making payments. It is accessible to everyone and it does not discriminate against anyone. It is the key payment method for the millions of people who do not have a bank account and are not able to use a card or mobile phone to make payments. When I was a teenager, my grandmother gave me the ‘secret handshake’. What made this gesture so meaningful was that there was an immediate tangible and therefore emotional result. Had she transferred money to my bank account it would have had a very different emotional effect on me. Yet, money is money, and the way it is being handled and passed on does not define its value.
What defines value though is cost. And cash is expensive. It needs to be designed, manufactured, transported, protected, counted and destroyed. Numbers that circulate indicate that the cost of cash is £130 per person per year. Many of us use price comparison websites to shave off a few pounds of our monthly mobile phone bills. If we add cost to the cash equation, it makes increasingly less sense to use it.
Cash – the only stalwart of privacy
A key argument for cash is the anonymity it provides. I am very much pro-privacy and try to avoid giving too much data about myself away. I do not, really, want anyone or any business to know how, where and when I spend my money, and to predict or even influence what I am going to do next. Yet I still prefer cards over cash. They are simply more secure and more convenient.
But for me, cards are transitional only. Once crypto-currencies evolve into a mainstream payments method and can be used for day to day financial transactions, the discussion around convenience vs security vs anonymity will become irrelevant. We will then be able to make payments in a private, anonymous and secure way. No more cards, no more cash needed. These currencies will likely be issued by national central banks, but neither private banks nor card providers can then control, dictate or profit from the way we choose to pay for goods and services.
When talking to our clients, most agree that this will take many years to get there, but the current state of payments is unsustainable and will drive adoption. The current situation is neither cashless-friendly nor cash-friendly. Most shops accept cards and sometimes only accept card payments, yet we still need cash machines to pay at festivals, market stalls or fun fairs. Having parallel payment infrastructures in place is neither efficient nor helpful.
The future is digital. It is not cash
Our lives have become digital. We WhatsApp our friends rather than calling them, and we send emails rather than writing letters by hand. Digital has not completely replaced the physical, and should never fully do so. But it is impacting the way we think, work and interact with each other. This is how we describe what it is our clients do when we speak to the media and other audiences: they create something new and “better” that has an impact on our lives.
Exchanging physical coins and notes is not contemporary anymore. In a few years, carrying around a small card made out of plastic will not be seen as contemporary either. Our digital lifestyles create massive shifts in our behaviours and these shifts will continue to affect the way we make payments. A recent example is the launch of Apple Pay in Germany – a country which traditionally has been cash friendly.
When it comes to cash, there is emotion on one side and practicality, convenience, security and anonymity on the other. We as human beings would not exist without our ability to have and share emotions. But if we see transactions, such as buying or selling products, as a rational way to deal with other human beings, then the way we fulfil these transactions should be rational too. Cash may not be gone yet. But it is only a matter of time before it will be a thing of the past, evoking pleasant memories.
Published 18 December 2018 on hkstrategies.com:
http://www.hkstrategies.com/united-kingdom/en-uk/going-going-gone-future-cash/
As you can see, I have a very emotional attachment to cash. I like that I have much better control over how much I spend and that my children can use to learn how the financial system works. But I do not think that cash is very practical. I actually very rarely have cash with me. At a fun fair a few weekends ago, I had to hurry 10 minutes to a cashpoint and back so I could buy tokens for the rides, as the organisers did not accept cards. Without enormous pressure from various children, I would have walked on for sure.
I do not think cash is safe either. The number of people I personally know who have had cash stolen from them is in the dozens. Including myself. The number of people I know who had their bank card stolen and money taken from their account is – one. And their bank paid back the money within days as it could easily spot an unusual spending pattern. So if carrying cash is more risky, would it not make sense to get rid of it? It is exactly what Sweden does. But going completely cash-free is politically sensitive.
Cash does have its prize
Governments keep cash alive because it is a social method of making payments. It is accessible to everyone and it does not discriminate against anyone. It is the key payment method for the millions of people who do not have a bank account and are not able to use a card or mobile phone to make payments. When I was a teenager, my grandmother gave me the ‘secret handshake’. What made this gesture so meaningful was that there was an immediate tangible and therefore emotional result. Had she transferred money to my bank account it would have had a very different emotional effect on me. Yet, money is money, and the way it is being handled and passed on does not define its value.
What defines value though is cost. And cash is expensive. It needs to be designed, manufactured, transported, protected, counted and destroyed. Numbers that circulate indicate that the cost of cash is £130 per person per year. Many of us use price comparison websites to shave off a few pounds of our monthly mobile phone bills. If we add cost to the cash equation, it makes increasingly less sense to use it.
Cash – the only stalwart of privacy
A key argument for cash is the anonymity it provides. I am very much pro-privacy and try to avoid giving too much data about myself away. I do not, really, want anyone or any business to know how, where and when I spend my money, and to predict or even influence what I am going to do next. Yet I still prefer cards over cash. They are simply more secure and more convenient.
But for me, cards are transitional only. Once crypto-currencies evolve into a mainstream payments method and can be used for day to day financial transactions, the discussion around convenience vs security vs anonymity will become irrelevant. We will then be able to make payments in a private, anonymous and secure way. No more cards, no more cash needed. These currencies will likely be issued by national central banks, but neither private banks nor card providers can then control, dictate or profit from the way we choose to pay for goods and services.
When talking to our clients, most agree that this will take many years to get there, but the current state of payments is unsustainable and will drive adoption. The current situation is neither cashless-friendly nor cash-friendly. Most shops accept cards and sometimes only accept card payments, yet we still need cash machines to pay at festivals, market stalls or fun fairs. Having parallel payment infrastructures in place is neither efficient nor helpful.
The future is digital. It is not cash
Our lives have become digital. We WhatsApp our friends rather than calling them, and we send emails rather than writing letters by hand. Digital has not completely replaced the physical, and should never fully do so. But it is impacting the way we think, work and interact with each other. This is how we describe what it is our clients do when we speak to the media and other audiences: they create something new and “better” that has an impact on our lives.
Exchanging physical coins and notes is not contemporary anymore. In a few years, carrying around a small card made out of plastic will not be seen as contemporary either. Our digital lifestyles create massive shifts in our behaviours and these shifts will continue to affect the way we make payments. A recent example is the launch of Apple Pay in Germany – a country which traditionally has been cash friendly.
When it comes to cash, there is emotion on one side and practicality, convenience, security and anonymity on the other. We as human beings would not exist without our ability to have and share emotions. But if we see transactions, such as buying or selling products, as a rational way to deal with other human beings, then the way we fulfil these transactions should be rational too. Cash may not be gone yet. But it is only a matter of time before it will be a thing of the past, evoking pleasant memories.
Published 18 December 2018 on hkstrategies.com:
http://www.hkstrategies.com/united-kingdom/en-uk/going-going-gone-future-cash/
14 January 2014
Blog post: The times for banks they are a-changin'
2013 was not great for financial institutions: The British Social Attitudes report revealed that only 19% of the UK population think that financial institutions are well run. This makes the banking sector bottom of the league and is a far cry from 1987 when public trust in banks was higher than 90%, writes Robert Roessler.
It is too simplified to blame Lehmann, Libor and PPI mis-selling alone. Regulators with a focus on increased competition have also created an environment for non-banks to enter financial markets. They connect people and enable them to conduct financial transactions directly with each other, with no more need for a bank to be involved.
There are many examples where this has happened. Leading UK payday lender Wonga has revolutionised access to money at short notice, and in 2012 the company lent £1.2 billion in four million loans, which generated profits of more than £1 million per week. Peer-to-peer lending platforms go one step further and cut out the middle-man completely by enabling individuals to lend money to other individuals. These platforms - the most popular ones in the UK are Zopa, Funding Circle and Rate Setter - have created a win-win situation: they offer better rates to borrowers than banks as well as attractive returns for lenders.
Traditionally, financing a project or business required asking one or a small number of banks for a large sum of money. Crowdfunding reverses the approach by asking a large number of people each for a small amount of money. Even though many projects fail to get funding, there are many success stories. In 2012 an estimated £200m was raised in the UK through crowdfunding, this is likely to increase many-fold this year and the years to come.
Peer-to-peer exchanges such as Kantox and Transferwise have similar positive growth prospects. They enable individuals and companies to buy or sell currencies to counterparts directly, without a central institution exchanging one currency into another before making a payment. They are highly attractive as they charge a fraction of banks' rates, which typically include commissions, transfer fees and receiver fees.
With rising interest in these services, the question is what the banking sector is going to do. Currently they are less concerned: Transferwise's 20-30 percent growth per month and daily transfers of £1 million is impressive, but with global currency markets exchanging trillions each day this is a small drop in a very large ocean. However, disrupting technologies in combination with regulation have the potential to change an industry for good: The EU's Payments Service Directive paved the way for non-banks to offer payments services, and enabled companies such as PayPal to rapidly gain a large share of the market.
The landscape will continue to change, but banks will not give up. They will focus on core areas such as private and investment banking, as well as services such as mobile banking which they will market aggressively to increase customer loyalty. But traditional banking areas such as lending and payments will see even more alternatives to banks. And ultimately the financial revolution will encroach on an area which is so inherently linked to banks that it is hard to believe it will ever be separated: money.
Published 14 January 2014, read the full article here: http://www.thedigitalbankingclub.com/blog/the-times-for-banks-they-are-a-changin/
It is too simplified to blame Lehmann, Libor and PPI mis-selling alone. Regulators with a focus on increased competition have also created an environment for non-banks to enter financial markets. They connect people and enable them to conduct financial transactions directly with each other, with no more need for a bank to be involved.
There are many examples where this has happened. Leading UK payday lender Wonga has revolutionised access to money at short notice, and in 2012 the company lent £1.2 billion in four million loans, which generated profits of more than £1 million per week. Peer-to-peer lending platforms go one step further and cut out the middle-man completely by enabling individuals to lend money to other individuals. These platforms - the most popular ones in the UK are Zopa, Funding Circle and Rate Setter - have created a win-win situation: they offer better rates to borrowers than banks as well as attractive returns for lenders.
Traditionally, financing a project or business required asking one or a small number of banks for a large sum of money. Crowdfunding reverses the approach by asking a large number of people each for a small amount of money. Even though many projects fail to get funding, there are many success stories. In 2012 an estimated £200m was raised in the UK through crowdfunding, this is likely to increase many-fold this year and the years to come.
Peer-to-peer exchanges such as Kantox and Transferwise have similar positive growth prospects. They enable individuals and companies to buy or sell currencies to counterparts directly, without a central institution exchanging one currency into another before making a payment. They are highly attractive as they charge a fraction of banks' rates, which typically include commissions, transfer fees and receiver fees.
With rising interest in these services, the question is what the banking sector is going to do. Currently they are less concerned: Transferwise's 20-30 percent growth per month and daily transfers of £1 million is impressive, but with global currency markets exchanging trillions each day this is a small drop in a very large ocean. However, disrupting technologies in combination with regulation have the potential to change an industry for good: The EU's Payments Service Directive paved the way for non-banks to offer payments services, and enabled companies such as PayPal to rapidly gain a large share of the market.
The landscape will continue to change, but banks will not give up. They will focus on core areas such as private and investment banking, as well as services such as mobile banking which they will market aggressively to increase customer loyalty. But traditional banking areas such as lending and payments will see even more alternatives to banks. And ultimately the financial revolution will encroach on an area which is so inherently linked to banks that it is hard to believe it will ever be separated: money.
Published 14 January 2014, read the full article here: http://www.thedigitalbankingclub.com/blog/the-times-for-banks-they-are-a-changin/
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