Millions of people won’t require a bank account in the near future, according to finance entrepreneur Brett King, as technology solutions continue to disrupt the role of funds distribution traditionally controlled by banks.
King’s comments come after the company that operates an exchange enabling the trading of digital currency Bitcoin was licensed as a payments services provider through a partnership with two French financial institutions.
Bitcoin is a decentralised digital currency that instead of relying on a central authority like the Reserve Bank to issue new money, relies on individuals “mining” their own coins and trading them via peer-to-peer networks.
“It doesn’t matter whether it’s Bitcoin or someone else, someone will break the back of this,” King said.
“With the digital world you can’t hold currencies to a single geography any more. You’re going to have a better more efficient way of sending money around the planet.”
King, an Australian consultant and author currently based in New York, is the founder of Movenbank, which is preparing to launch in the US in February. Movenbank will blend mobile banking and a mobile wallet into one product.
The move towards virtual currencies and mobile wallet products is happening as Australian banks continue to invest millions on revitalising their branch networks.
Yesterday Westpac revealed it had spent $240 million on the first phase of a major branch refurbishment program, including new 24-hour foyers with machines enabling customers to exchange notes for coins, and digital touch screens allowing customers to email information to themselves.
“Some commentators have predicted the death of the branch in the digital world but nothing could be further from the truth,” said Jason Yetton, group executive of Westpac Retail and Business Banking.
He added that the advent of mobile banking, first through smart phones and now tablets, had actually resulted in customers wanting more advice from staff about how to manage their finances.
Westpac did not respond to a request for comment about Bitcoin.
Sam Plowman, head of direct banking at National Australia Bank said the NAB is monitoring a number of developments in what he called the “exciting and rapidly developing” digital payments space.
King said mobile banking and social media were helping to create a “new identity layer” between customers and providers, and disrupting traditional banking,
“Will you still need banks? Absolutely, to cash in and out of the system, but what happens in the distribution layer or the way value is traded is up for grabs.”