When banking was about protecting touchable financial assets–stacks of gold coins and engraved stock certificates–the edifices built to contain them looked like fortresses, imposing and impregnable.
When the essence of banking is about transferring a few bits from one side of a digital ledger to another, banks can look like this:
This is a typical storefront in Kenya, where there are thousands of small entrepreneurs selling necessities packaged in the daily doses that many Kenyans’ limited cash can afford at one time. Yes, some of those Kenyans make up the world’s unbanked, but that’s not the point. If you’re reading this, you’ve probably already seen retail banking outlets cropping up in the supermarkets of the developed world.
The principal raison d’etre of a retail bank–holding onto my money and letting me get at it from time to time–is going away. It just is, and the reason (you were expecting this, perhaps) is nothing less than ubiquitous connectivity. With a network wherever I need it, I can store digital money anywhere, as long as there are many physical devices that can help me transfer those assets when and where I need. So why would that physical place have to be a destination dedicated to that, as opposed to one that might also let me pick up a few groceries, pay some bills, mail a package, or anything else I need to do in life?
Vodafone’s intrapreneurial mobile transactions effort, called M-PESA in a clever adaptation of the Swahili word for cash and led by the impassioned Nick Hughes, has signed up over 2 million users in Kenya through the mobile operator Safaricom. It allows its subscribers to load digital money to their mobile phones, to transfer it to other people and institutions, and to offload it back to cash. “Only some of our users are unbanked. As a payment service, we’re really competing with the cash economy,” he told me. We talked last week at ITU Telecom Africa, in a quick meeting sandwiched in-between his mission to win banks on board for the expansion of the program in other markets. He admitted they’re a tough crowd to win over.
Dominic Endicott, a partner in the wireless-focused venture capital concern Nauta Capital, said something the other day that is probably supremely obvious, but potentially earth-shaking: “The wireless world can give us more information about the behaviors of its users than at any other time in the market.”
When mobile operators can easily and instantly move our money around for us, and can mine that activity to know where, how, and when we spend it–why on earth do I need a retail bank, reluctant or otherwise?
Media, both the industry and its physical representations–LP, tape, DVD, more–have been forever transformed by the move to bits. Retail banking, and indeed physical currency as we know it today, will go away. Blame–or thank–the network.