Perhaps surprisingly, it's the emerging economies that are the early and most avid adopters of new payment methods. In India, 56 percent of consumers say they regularly pay for goods using mobile wallets; in Thailand that figure is 51 percent, whereas in Spain and the UK it’s 25 percent and 14 percent respectively.
Millennials are driving the change and shaping the future of money. By 2025, millennials (those born after 1980) will comprise three quarters of the global workforce and according to Pew Research, in the US, they will overtake the baby boomer generation by 2019 when the millennial population will increase to 73 million and the boomers sit around 72 million.
Tainted by the legacy of the Global Financial Crisis, millennials arguably had the most reason to lose faith in the current financial system and according to research on the Future of Money report 76 percent of millennials are looking for new forms of banking. Millennials are driving the move to mobile banking
Revolut: a mobile bank revolution?
The UK fintech company Revolut is one of those rare creatures in the business world, a unicorn. It has been growing voraciously since beginning in 2015 and the privately held company is now worth over $1 billion. Like its competitor Monzo, it is one of many, many mobile banking apps globally.
Revolut has ambitions to replace conventional bank accounts and says that it currently processes $1.8 billion in transactions each month. The app-based bank offers a prepaid VISA or Mastercard pre-paid debit card and a current account that allows customers to hold, exchange and transfer money without fees in 25 different currencies. It has also added the functionality of buying, holding and exchange of Bitcoin (BTC), Ether (ETH) an Litecoin (LTC) with 25 fiat currencies. However the currencies remain in the app and cannot be moved to another crypto wallet.
The business is targeting the millennial and younger market and recently announced that it is going to launch a debit card that gives users 1 percent cash back in cryptocurrencies. This marks another point of difference with conventional banks, many of which have even gone as far as stopping customers from buying cryptocurrencies with their credit cards.
The company’s co-founder and CEO Nikolay Storonsky was a trader with Credit Suisse and Lehman Brothers, who set up the company alongside a Vlad Yatsenko, a former Credit Suisse and Deutsche Bank developer, after raising just $3.5 million in funding.
Are we close the end of the cash age?
With the proliferation of so many digital mediums for holding, transferring and transacting our money, looking from street to street to find your bank’s nearest ATM machine to take cash out seems like an ancient way of living.
Proponents of cryptos as a form of payment are usually quick to cite cash’s decline to bolster their argument. However, as anachronistic as the cash system seems now its use has not diminished as much as popularly believed.
“Reports of the death of cash have been greatly exaggerated,” the president of the San Francisco Federal Reserve said after its review of the global money supply in November. “In most countries, demand for notes and coins is strong and shows no sign of slowing down.”
According to the bank’s study, which covered 2006 to 2016, the amount of American money in circulation around the world has grown by over 87 percent over the past 10 years. In 2006 $784 billion worth of dollars changed hands globally, but in 2016 that figure was $1.46 trillion.
Nor was it just in US dollars that cash circulation was growing, of the 42 major economies that the Fed studied across the world 40 saw the growth of circulation outpacing economic growth over the past decade. Also, the private sector’s statistics corroborates with the Fed’s study: according to Western Union, 83 percent of the world’s transactions are in cash, down only slightly from 85 percent a decade ago.
“We don’t believe in a world that will be cashless,” Odilon Almeida, president of Western Union told CNN. “Cash will continue to be the bulk of payments for the next fifty years. But digital will grow faster.”
The two exceptions in the Fed’s study were Norway and Sweden.
So we have two very contrasting findings. In the context of the Future of Money report the emphasis is on demographics as a powerful force driving social and economic change; that millennials will soon become the most dominant generation in the workforce and that they are seeking ways to disintermediate conventional banking. Also, emerging economies with burgeoning youth populations and restricted access to traditional banking are already the biggest adopters of mobile banking and there is no reason why this trend won’t accelerate.
But we should temper the idyll of a totally cashless society with the Fed’s findings and consider that although we may be in a fasting-moving trend to mobile and decentralized banking, we’ve only scratched the surface there’s still a long way to go.