Marius Royal

Market Analyst

October 5 2018

From Paper to Plastic: Banking in the 21st Century

I’m not sure exactly when this trend started, but over the past few years I’ve noticed I’ve taken paper money with me less and less. No matter the circumstance, it’s become a convenience to use a credit card or debit card to make most of my purchases. Instead of having to make trips to an ATM or bank I can simply tap my card or punch in my pin and go about with my day, without ever having to use physical money. Yet, this does propose an interesting question as to how using a credit card, instead of a bank notes, creates a disconnect to the value of your money. Instead of money being something that you could tangibly hold, it’s become more so a number represented on your screen. Instead of seeing the amount of money you have with you, with bank notes in your pocket, you have a credit card that allows you to make purchases, allowing you to pay back purchases at a later date. Is it fair to say that with the ever-increasing world of digitalizing currency, we are desenastizing the value of our money? I would say no.
Digitalization of banking technology doesn’t absolve you of financial responsibly, quite the contrary, it’s making your life a lot easier to manage your finances. Now more than ever we have a slew of personal finance apps, along with financially literate advisors that should make it the easiest time in history to budget and take control of your finances. All we must do is look at how banks are creating brand new avenues for banking, to streamline customers towards digital banking.
Some of these steps are small, but they all aim to reduce the need of going to a bank’s branch. One large trend in the past few years has been the digitalization of cheques. Some financial institutions have operated with allowing just their ATMs scanning and cashing cheques, however, some institutions have taken it a step further. The British bank Barclays has created a way for cheques to be cashed simply by taking a photo . Using their mobile app, taking a photo with your smartphone allows you to upload the photo to the app and verify the cheques within seconds – without you ever having to speak to a teller.
Here in Canada, major banks are operating towards full digitalization as well. Anecdotally; my experience with TD Canada Trust, located here in Toronto, shows that all banking activity can be done digitally. Through either the app on my phone, or by visiting the website, I can pay credit card bills, invest, and manage my finances without ever receiving a letter in the mail. Instead of having to sift through bank-related mail and make sure I’ve paid the balance of my credit card, I can quite literally open the app on my phone, anywhere, at any time, and pay all my bills by touching a couple buttons on my screen.
While this may seem normal for most people, it is personally fascinating to objectively stand back and observer how far our empowerment with banking technology has come. Projects, like what we’re doing here with Finpass, reinforce the idea that digitalization of money isn’t desenastizing us but is allowing us to reach new levels of financial freedom. While I believe it is fair to criticize changes towards how our financial system is operating, and what that change towards a digital frontier will do to human behavior, I believe these concerns do not reflect the benefits we as a society gain from the digitalization of banking. Digitalization of banking does not reinforce a disconnect to the value of money, in fact it makes everything easier. The less we have to go to physical bank branches to manage our finances, the more efficient those branches become to those who do use them, and the more efficient our lives become with utilizing our finances digitally.
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