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By Aaron Kroll

What is the Future of the Banking Industry?

A bank is the most integral part of an individuals financial life. Banks are how we make payments, get paid, and keep a majority of our savings. Banks have had to be dynamic over the last 20 years and the environment continues to change and develop. Before the rise in digital banking cards were rarely used, checks were written for many transactions, and cash was king. Now, with the introduction of technology and financial payment solutions, such as Venmo and Paypal, most people will never see their money other than as a number on a computer screen. Most banks don't even keep large amounts of cash on hand anymore. It is amazing how much technology has changed the banking industry and all the risks it poses.

This leads us to pose the question. What does the future hold for banking? Many people have tried to argue that cryptocurrencies will replace banks I do not think this is possible. While crytocurrencies and blockchain provides a new dimension to the financial environment it doesn't have the same ability to move money from a saver to a borrower. Banks are so much more than just the simple deposit and payment transactions people normally think of. Banks provide consistency and a medium between everyone and everything, without banks we would not have a way to safely deposit money. Consider the volatility alone in a crytocurrency. How could you know that the amount of money you deposit or are paid is the same today as it was yesterday. When money acts more like a commodity rather than a vehicle then we run into problems. While I do not believe there is any replacement for banks, I do think the future of banking is a little hazy.

As payment solutions continue to develop institutions are racing to keep up. In the future I think it is very possible that instant transfers such as wires become non existent and clearing houses or payment processors such as Visa are eliminated or morph into some sort of bank.

In addition to payment solutions banks will also offer more incentives with their accounts, such as Kasasa, which provides added benefits to consumers such as cash back similar to credit cards.

Large cutting edge banks will be able to keep up with the transforming of the banking industry leaving small banks in the dust. As younger generations (millennials) gain more of a market share of the financial wealth look for more and more consolidations of small rural banks and less relationship banking. The future of banking will benefit the consumer in ease of use and possibly the pocket book, but will hurt those who value relationships and locally owned and locally devoted bank.

In conclusion, Banks have been around for thousands of years and have weathered the changing of times. The industry will continue to consolidate with larger banks having a greater chance of success than smaller ones. Bank's are the definer of developed countries and will not go away. Technology will change the landscape of the banking industry, but cannot eliminate it.

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