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The Next Big Thing - A Bank

I've been known to make some outrageous predictions about such things as how many (few) global banks there would be in a few years (last year) and the boring sort of stuff, like there is no security on the internet, and that tech stocks like google were over-valued, privacy and trust issues, that sort of thing.

I've been thinking about 'banking' lately. On a cosmic scale.

There is one inescapable conclusion I have come to:

Existing banks and 'financial systems' will not provide the majority of the human race with banking and transaction services within 5 years.

I'll make the prediction that one 'bank' will have more customers than all the rest put together within these 5 years.

The reasons are obvious:

The existing financial transaction infrastructures are too expensive.

It will require a very low-cost operation to service the billions of potential savers who won't have vast sums on deposit nor the capacity to pay the sort of fees seen in the developed nations. Let's face it even the developed nations can't afford those.

That will present some difficulties at some point in the future as the popularity of very low fee banking moves into the developed world.

How low can it go? I think we'll see fee's settle somewhere between 1% and 10% of what they are now - except for credit, but that will come under some very serious pressure in the near future.

I see many new operators with 'new' services but their fees are still way above reality, or at least the reality of the majority of humans and this little 'unexpected financial crisis' won't assist existing operators, certainly those who didn't expect it.

It seems like a good place to start. Simply provide enough low cost transactions. What can that developing world wallet bear? I know it's more than enough to make a profit, and think of the upside as the wealthier potential customers catch on.

There are other potentially important benefits if it is done right, timely monitoring of the pulse of the economy, better tax collection and law enforcement, less fraud, lower costs for government and small businesses, and I'm sure most developing countries would embrace that.

Given the current issues, perhaps developed nations governments might not immediately embrace it, out of fear of letting any 'bank' get too big and burn them again.  Quid pro quo will change that.

I'm sure it's not being done right just yet, no matter how many African banking initiatives using SMS or mobile that I see so far, because we all know they just aren't practical for everyday stuff in the street.

I have noticed that there is a lot of interest in the area, from many quarters, because the potential is really quite exciting - if done right. Doing it right will help the developed world even more in the long run.

Although you can't quite relax, you can rest assured someone somewhere is going to do it exactly right. We certainly do live in interesting times.


ps. I notice that they have found feathered dinosaurs that roamed China a couple of hundred million years before what was previously known. Legend has it that a dragon breathed fire in those parts, perhaps we'll see another one soon and hopefully it won't be us getting burned.


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19 Mar 2009


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This post is from a series of posts in the group:

Futuristic Banking

Stuff that's out there in the way out and beyond in banking.

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