Friday, June 6, 2014

Where is banking going in ten years?

There have been a lot of changes in banking in the past few years. Some changes are subtle, but some create a new paradigm, such as the advent of Mobile Banking. Mobile Banking has the potential to be bigger than Online Banking was at its introduction. Why? There is a much larger installed base of mobile smart phones today, 1.5 billion worldwide, than there were PC’s in 1997 when Online Banking went live. Mobile Banking acceptance by younger adults is off the charts. They do not fear using their phones for banking purposes and welcome the convenience Mobile Banking promises them.

So, what are some of the big changes we will see coming in the near future? For starters, it is a foregone conclusion that paper checks are going away. With the proliferation of online bill pay systems, there is very little need for consumers to sit at the old desk and write out checks once or twice a month. You won’t have to lick any of those nasty bill envelopes anymore! Yuck.

Today, it takes me five minutes to pay 7 bills. No stamps, no envelopes, no calculators. Just me, my bills and my PC and my bills are paid in 24-48 hours mostly. It is very easy even for beginners.

Another change will be the new EMV or EuroPay MasterCard/Visa. This is the new “chipped” cards that many have been talking about. Simply put, EMV (sometimes referred to as chip-and-PIN, or chip-and-signature) is the most recent advancement in a global initiative to combat fraud and protect sensitive payment data on cards. A cardholder's confidential data is more secure on a chip-enabled payment card than on a magnetic stripe (magstripe) card, as the EMV card supports dynamic authentication, while the current mag-stripe card does not (the data is static). Consequently, data from a traditional magstripe card can be easily copied (skimmed) with a simple and inexpensive card reading device – enabling criminals to reproduce counterfeit cards. Chip (EMV) technology is effective in combating counterfeit fraud with its dynamic authentication capabilities (dynamic values exist within the chip itself that, when verified by the point-of-sale device, ensure the authenticity of the card). The one thing that  cannot be copied  is the chip in the card. (A  lot of people are saying that if we had EMV cards, the Target data breach would not have happened. Incorrect. The EMV cards would not have protected anyone from Target’s failed attempts at data security on their systems.)

We still see a lot of paper loan applications around today. More and more, financial institutions are moving to paperless processes. Your application is online and all the loan underwriting will be done on line. You will sign with your electronic signature. Do you need to have paper copies of disclosures in your files at home? No, not if you can access them on your phone, tablet or PC whenever you wish. You can save a digital file of your documents on the security of your home computer if needed.

Teller roles are changing and that means that your bank will change as well over time. Some credit unions have installed video Tellers over the past few years. There is one CU that is currently experimenting with a holographic Teller. Tellers are now being trained to offer advice and show you how to use the latest technology, whether it’s online banking, a mobile application, or digital documents; the role of the teller is not what it used to be.

Consider that there is already a lot of automation in banking. Automatic Teller Machines, ATM’s, have become ubiquitous in our banks, convenience stores, airports, and even gas stations. Many of today’s ATM’s will give you a copy of the check you deposited for your records. Credit unions have really changed the paradigm of the ATM as they “share” their ATM’s; meaning that if I bank at Meriwest Credit Union, I can go to virtually any other CU’s ATM, nationwide, and make a deposit to my account at Meriwest. Credit unions have offered shared ATM’s for many years.

Other forms of automation are cash and coin counters. Certain new ATM’s are being equipped with cash counters in them. You deposit the cash in the slot and the machine counts and verifies your deposit. In most of our branches, we offer our members a coin counter. They can dump their accumulated coins in the machine; it counts them and gives them a receipt. Today we take that receipt to a teller who will deposit the amount in our checking account. In the near future, the coin counter will be connected to the financial institution and deposit the coin directly to your account. That is, if coins are still around.

It may be unbelievable, but actual physical money will make an exit from our lives. The dollars and coins with which we grew up will no longer be necessary to make transactions. All of our money will be digitally managed. Today, unless we physically use cash, most of our transactions are now digitally managed.

Your employer pays you by Direct Deposit. You go online and pay your bills with online bill pay. You get a check in the mail for a rebate. You use your Smart Phone to take a photograph of the check and use Remote Deposit Capture to deposit it in your checking account. Your financial institution never has a physical copy of the check, only digital. You walk to the deli and buy a sandwich and a soda with your debit card. We drive across a bridge and “beep,” our bridge tolls are paid automatically from our checking account. We can pay our taxes electronically and receive our refunds in the same manner.

I think it is easy to see the future is now and these changes are coming faster than we think.


Our next Free Financial Workshop:
Car Buying 101
Saturday, June 14, 2014 at 10 AM

Learn how to plan, select, and make your deal for your next new or used car. We will cover research, financing, and explain how to save hundreds of dollars on vehicle warranties.

Location: Meriwest Credit Union Main Office
5615 Chesbro Ave.
San Jose CA 95123


  1. Thank you for sharing! This is really good!

  2. Thanks, Nectarious. I appreciate your feedback.

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