We all rely on money in our everyday lives. Currency is simply a system for trading human time, and most people probably don’t question it. It’s easy to forget just how much our money usage as a society has evolved in the past few decades. After all, online banking only started gaining traction in the late 1990s.
When was the last time you considered the history and the future of money? The rise of electronic banking and digital currencies could be evidence that we’re moving towards becoming a cashless society. It’s fascinating to consider the potential of cryptocurrencies like Bitcoin. With more than 3,000 digital currencies out there, it’s an area full of both opportunity and controversy.
When we actively consider the possibilities of the future of money, it might provide us with a fresh perspective on our own personal financial circumstances. Maybe awareness of how money is evolving can help us make smarter and more forward-thinking financial decisions. Will our concept of money as we know it change entirely? We rounded up six key predictions on how currency and our relationship to it as humans are shifting.
Prediction #1: Digital Banking Becomes the Norm
Digitized banking is when banking services are carried out online to reduce risk, improve efficiency, and better serve customers. In-person banking is gradually diminishing, especially in the wake of the COVID-19 pandemic. With commercial banks’ branches becoming contactless and automated at an increasingly fast pace, it makes sense that the future of money will continue in this direction.
It’s unsurprising that experts are predicting more banks going completely digital in their service offerings. Digital banking is a win-win: Customers cut down on the time and hassle of brick-and-mortar banking transactions, while banks save money on office space by moving a part of their transactions fully online. Plus, it’s easier to sync up with a budgeting app that helps you stick to your monthly spending and savings goals. Digital banking allows customers to do everything they would be able to do with a traditional account and more.
Prediction #2: People Rely On Robo-Advisors When Investing
Digital currencies like cryptocurrencies are continuing to evolve and offer investment opportunities in the long run. With digital money management and AI investing growing rapidly in popularity across the globe, it’s no wonder that experts are predicting the continuation of these trends. Robo-advisors have become more mainstream with hundreds of options becoming available in the past 20 years.
Since AI-based investing solutions like robo-advisors usually don’t require a well-rounded knowledge of the market, they’ve become popular with new investors. However, the low barrier of entry (low starting deposits) can also encourage new investors to make risky moves, so it’s probably still wise to proceed with caution. On the other hand, robo-advisors can automate tedious activities that experienced investors would be concerned with.
Prediction #3: Cryptocurrencies Become Mainstream
Although cryptocurrencies are still a foreign concept to many people, they’ve been a global hot topic over the past two decades. Cryptocurrencies like Bitcoin leverage blockchain technology to gain decentralization, transparency, and immutability in an online banking universe. However, some people might not be quick to trust cryptocurrencies, which have a history of being notoriously volatile and requiring government regulation.
As the world continues to move towards financial exchange systems that reward convenience, blockchain-based digital currency is a viable path for the future of money. Major banks, accounting firms, software companies, and the government have all invested millions in cryptocurrency research or at least blockchain projects.” Will cryptocurrencies help us move towards an equitable cashless society, or will these idealistic plans be too difficult to implement and result in more inequality?
Prediction #4: Countries Move Towards a Cashless Society
Many countries are moving in the direction of digital payments in lieu of cash. Although it may sound futuristic to live in a world without physical money, it’s not too hard to believe considering the ease and convenience of digital payment systems like Apple Pay. There are important privacy and anti-discrimination considerations that economic leaders will have to keep in mind while moving more towards a cashless society.
Some developed economies are embracing a no-cash lifestyle faster than others. For example, European countries like Sweden use digital transactions for 98 percent of the country’s commerce. The potential benefits of digital payment infrastructures are exciting, but countries won’t be moving towards a cashless society quickly.
Prediction #5: Data-Driven Currency Rapidly Expands
Data-driven money that can be programmable might seem outlandish, but it also might not be as progressive or far-fetched as you think. We live in a global society where surveillance capitalism is widespread and a data-based economy is the norm.
New data insights are likely to change the way we think about and interact with currency. It’s natural that the future of money will involve data. In the 2020s, data-driven money will create new opportunities for millions of people. In fact, researchers at top universities have pointed out how data is a currency in and of itself nowadays.
Prediction #6: Money Management Becomes More Purpose-Driven
In the next decade, it’s likely that emerging developments in fintech will make our money work more for us and our values. With the rise of impact investing and belief buying, a younger generation of investors is using money in a more purpose-driven way, and they want their banks to reflect that. While the bank is getting rich off your money, not only could your money not be working fully for you yet, it might actually be working against you.
Passionate investors are tackling issues from climate change, corruption, and social inequality without relying on big banks that contradict their values. What does this mean for the future of money? Ultimately, banks invest our hard-earned cash wherever they see fit, typically yielding a significant profit. This means a bank could be investing your money in initiatives that you don’t actually support. These days, more people are raising their awareness of this mismatch between their values and their spending/investing.
Take a look at our graphic below where we outline some interesting points regarding the future of currency exchange. Considering how much money has changed over the last century alone, it’ll be fascinating to see what the future may bring.
While security and cost-efficiency are important, we can’t ignore that the future of money is digital and data. With the ability to stress less while managing their finances, whether it’s grocery budgeting or setting up automatic savings deposits, people love the convenience that emerging forms of currency encourage.
Sources: Forbes | CoinTelegraph | Capital.com