The nature of money is changing. And rapidly. Decades ago we paid for most things by cash or cheque. We visited our bank branches regularly to draw cash, pay in cheques and discuss our overdraft. We saved regularly into our bank savings account, and watched the interest payments steadily mount up.
The banks are undergoing a radical transformation
These days we pay for everything by card. First we had chip and pin, but now I pay for most shopping trips through contactless. Then there is Apple Pay and Google Pay.
It’s been years since I wrote a cheque. The only way I track my bank balance is through my smartphone app. I still use bank accounts to store some of my money, but I invest most of it in shares, because my bank pays next to no interest.
Banks used to recruit thousands of graduates each year. And they were plum jobs — well-paid roles which would see you through until retirement. These days the financial industry recruits far fewer people, and many have been made redundant.
Former Barclays CEO Anthony Jenkins says we are approaching the Uber moment for UK banks, when the unstoppable force of technology means they will have to do away with thousands of branches and jobs.
There is a lot of truth in what he says. The banks are going through a transformation as radical as any industry has seen. Tonnes of the baggage of the past has been done away with, leaving us with something fast, simple, and secure.
The future is simplicity
The future is not some grand and elaborate vision. No, the future is simplicity. To me, banking no longer means walking to my High Street branch, and queuing up to access the various services. Now it means checking my smart phone app to see my balance, and transferring the occasional lump sum to my savings account. And that’s all. People are rapidly realising the rest is superfluous.
And the banks have now twigged this. Just like BT rapidly cottoned on to the fact that fixed line telecoms was an industry in decline, and diversified into pay-tv and broadband, so the banks are building on their strengths in business banking, investment banking and credit cards. They still fund a huge number of startup small businesses each year, and oil the wheels of UK plc.
But they are moving to the slim line, fast, and low cost model of modern banking. And if there is a new frontier in banking, it is now not so much Manchester and Bristol, but Shanghai and Chennai. Just as Unilever grows its business by expanding into emerging markets, the banks must too.
I suspect that the most promising banks of the future have already realised this. That’s why some of the best financials to buy into are HSBC, Prudential and Bank of China.
So yes, I think this really is the banks’ Uber moment. And the worst thing they can do is stand still.