It doesn't take a financial analyst to see that the checkbook is virtually useless anymore. In fact, card readers are also on their way out. Consumers are not to worry if they're still afraid of using ATM machines or being charged outrageous fees associated with transferring money. It's forecasted that by 2020, these problems will be a thing of the past and the way people use and handle money will be vastly different. Some of the forecasted changes are already under way.
Gi Fernando of Free:Formers pointed out recently that technology is moving at such an alarming rate that it's beginning to scare people. Fernando is one of many that confidently believe that the methods people use for money management today will be completely different and "unrecognizable" within five years.
These are five different things people use every day, but likely won't be around in five years.
Card Readers and PIN Numbers
As biometrics become the more common choice for authentication and security access, PIN numbers and simple pass codes and their card reader counterparts are becoming more obsolete every day.
Companies are beginning to use state of the art tools such as watches, belt buckles, retina readers, fingerprints, and contact lenses to identify and authenticate user access to accounts. Fernando predicts that it won't be long before these authentication tools will completely replace card readers and PIN numbers.
Banking analyst, Steven Lewis, also agrees that the world will see a significant rise in biometric authentication over the next few years. In fact, he believes that it won't be long before eye scanners and fingerprints completely take the place of signatures. Fernando predicts that won't be uncommon by 2020 for consumers to walk into a store, find what they're looking to purchase, pay for the items using their devices, and leave.
The Banks You Know Now
Many financial analysts aren't so sure that banks, themselves, will go away entirely. However, they will operate differently. Rather than seeing them on street corners, consumers will likely see them in grocery stores, coffee shops, or even as pop-up shops. While these banks will still give consumers the opportunity to do their banking face-to-face with representatives, they will be placed in on-the-go environments for fast-paced societies.
Fernando compared future banking locations to "Apple stores," in terms of look and feel.
Checks and Cash
Regardless of what enthusiasts of cashless societies may forecast, it will essentially always exist. It's a basic form of payment that's easy, quick, and accepted by most people or entities.
However, Fernando predicts that it will eventually die out, even though it may take an incredibly long amount of time. Before this happens, however, electronic payment methods and smartphone wallets will rise in popularity as means for paying for train fare, clothes, groceries, and much more.
It's a lot easier to see the check's demise. Lewis pointed out that the check has visibly died a slow death over the past few years, and that digital technology has been used instead to transmit the same check.
Traditional Loans
Borrowing money from a traditional bank is yet another financial norm that is slowly becoming obsolete. More people are using P2P (peer to peer) lending groups/websites in order to borrow money without first trying traditional banks or financial institutions.
Among all of the US P2P lenders, Prosper and Lending Club are the largest. In 2013 alone, both lended over $2 billion to borrowers. In 2012, the two groups lended just under $900 million. It's currently predicted by Foundation Capital that P2P lending will be globally with $1 trillion+ by the year 2025. Funding Circle, a massive UK marketplace, also forecasts major growth.
Lewis went on to share that he and other analysts have seen notable growth in the P2P lending industry over the past few years. While they still only hold a small portion of the market, traditional financial institutions are beginning to notice in a big way. They've taken so much notice that they've begun partnering with the P2P lending groups in order to create better choices for customers.
Wire Transferring Companies
While wire transfer companies are essentially still useful, it's predicted that these types of groups will also become a thing of the past before long. Various companies are beginning to sprout up that offer consumers more competitive transactions. CurrencyFair, Kantox, and Transferwise are just a few.
Users are turning more to social media to wire and move money as well. For example, Azimo is a relatively new service that users can take advantage of via Facebook or the Azimo website/app to wire money to their friends and family. A commercial bank can charge up to 12% to facilitate a wire transfer, and a traditional bank can charge up to 6.5%. Azimo claims to only charge 2% on the transaction.
Every 2.5 months, Azimo doubles in size according to CEO Michael Kent. Kent shared that 98% of money transactions are still occurring offline, but he foresees this number changing dramatically as people begin discovering the benefits and savings associated with digital transfers.
There's no denying that finances are moving in a more electronic direction. It's argued that this move is partly due to security issues that traditional finance methods face, but it's also clear that these changes will definitely make banking and handling finances much more simple. As you know, only time will tell what will become of the banking and finance world as we know it.
