03 July 2017
In the ongoing debate about cash, the industry has a tendency to preach to itself, and frame the conversation in somewhat dry and economic language that does little to resonate with what will hopefully be the ultimate arbiters of whether cash should survive or not, ie. the public (something, incidentally, that that the ICA is attempting to redress in its Cash Matters campaign).
Hence the panel discussion convened by the International Currency Association (ICA) at the Currency Conference on ‘The Future of Payments Landscape’ made a refreshing change, involving as it did three distinguished speakers from outside the ’industry’ that represented a cross-section of alternative – and in some cases strident – views.
Margaret Doyle, Head of Financial Service Research at Deloitte, has reported on numerous issues surrounding banking and regulatory strategy, the latest being a study on disruptive developments in the European retail banking arena. She is also a writer for the Economist, Daily Telegraph and Reuters and a frequent commentator on financial and current affairs on mainstream television news channels.
She focused on the findings of this study, citing the challenges facing banks as changes to consumer preferences, technology and regulation. Payments are the main touchpoint between banks and their customers, but governments – eager to drive down the costs of payments to the economy – are seeking greater transparency and competition. Stepping up to the opportunity are so-called ‘tech titans’ for whom personal data, for which personal transactions are the best source to mine, is the goal.
‘Data is the world’s most important resource’ she said. This data is used to amass profiles on not just millions but billions of consumers, and sell accordingly (adding that, if you think something is for free, then it’s you that’s the product).
As a result, she said, new payments oligopolies will emerge, either to replace the banks or to complement them.
David Wolman is a journalist, contributing editor at Wired and has written for publications such as the New York Times, the New Yorker, the Wall Street Journal and Business Week. He is also the author of ‘The End of Money: Counterfeiters, Preachers, Techies, Dreamers — and the Coming Cashless Society’.
His induction into the world of cash came when he wrote an article for Wired stating that ‘physical currency is a bulky, germ-smeared, carbon-intensive, expensive medium of exchange. Let’s dump it.’
Such was the backlash that he decided to dig deeper, and spent a year researching for the book. Along the way, and subsequently, he came to realise that there are attributes to cash and that the debate between cash and cashless is far too binary.
‘Just because the car came along’, he said, ‘didn’t mean the end of bicycles. The two co-exist. Cash and non-cash payment mechanisms should be able to do the same’
Brett Scott is an independent consultant and researcher in the field of alternative finance and financial reform. He authored ‘The Heretic’s Guide to Global Finance and is an associate of the Institute for Social Banking, as well as a fellow of the Finance Innovation Lab.
Brett was forthright on the so-called War on Cash, which he said is real, and driven by the banks. The cash industry is not framing the narrative in the right way, and letting the other side get away with presenting the glorious future for digital payments.
‘It’s not the cashless society we are talking about,’ he said, ‘but the bank payment society’. And the war is not on cash, but on privacy and informality. Also, as a sceptic of capitalism, he now prefers ‘good old-fashioned capitalism’ to the emerging capitalism of surveillance, bureaucracy and zero privacy.
He also provided useful ammunition to those concerned that cash is conflated with crime. For a start, he said, the narrative against cash is exaggerated, inaccurate and incomplete.
Moreover, if financial inclusion is a goal for the impoverished people of the world, then digital payment technology is not – as is so often mooted – the answer. Particularly as ‘fintech’ is not interested in the people at the bottom of the pyramid, but only in profit.
He also poured cold water on the notion, raised by David Wolman, that the unbanked and financially excluded are particularly vulnerable to the security risks of holding cash. That, he said, is not the fault of cash, but the fault of societies without effective institutions, including law enforcement.
‘Take Sweden’ he said, ‘as an example of a country that is moving towards cashless. If this happens, it will be because Sweden has strong and stable institutions. If you don’t have the laws, the police, the governance in place, then crime will happen and it makes no difference whether you are a cash-based or a cashless society.’
Delegates expecting the panel to be a diatribe against cash were pleasantly surprised. Instead, it was an inspiring and thought-provoking set of complementary perspectives from those outside the narrow confines of the industry.
As such, it provides useful ammunition in the campaign to promote the benefits of cash. And a step towards engaging a wider audience to help counter the powerful interests that are lining up against it.
This article appears in the June edition of Currency News