We all depend on money in our daily lives. Currency is simply a system for trading human time, and most people probably won't question it. It is easy to forget how much our money consumption as a society has changed over the past few decades. After all, online banking didn't catch on until the late 1990s.
When was the last time you thought about the history and future of money? The rise of electronic banking and digital currencies could be proof that we are on our way to becoming a cashless society. It's fascinating to look at the potential of cryptocurrencies like Bitcoin. With more than 3,000 digital currencies, this is an area of opportunity and controversy.
When we actively look at the possibilities of the future of money, we may get a new perspective on our personal financial circumstances. Perhaps, being aware of how money is doing can help us make smarter, more forward-looking financial decisions. Will our concept of money as we know it completely change? We have summarized six important predictions about how the currency and our relationship with it as humans will change.
Prediction # 1: digital banking will become the norm
Digitized banking is when banking services are performed online to reduce risk, improve efficiency and better serve customers. Personal banking is gradually declining, especially after the COVID-19 pandemic. With commercial bank branches becoming contactless and automated at ever faster rates, it makes sense that the future of money should continue in this direction.
It is not surprising that experts assume that more banks will fully digitize their service offerings. Digital banking is a win-win situation: customers save time and effort in brick-and-mortar banking, while banks save money on office space by doing some of their transactions entirely online. It's also easier to sync with a budgeting app that helps you meet your monthly spending and savings goals. With digital banking, customers can do everything they can with a traditional account and more.
Prediction # 2: People Rely on Robo-Advisor When Investing
Digital currencies such as cryptocurrencies are evolving and offer long-term investment opportunities. With digital money management and AI investing growing in popularity around the world, it's no wonder experts predict these trends will continue. Robo-advisors have moved mainstream through hundreds of options over the past 20 years.
Because AI-based investment solutions such as robo-advisors don't typically require extensive market knowledge, they are popular with new investors. However, the low barrier to entry (low starting deposits) can encourage new investors to take risky action. Hence, it is probably still advisable to proceed with caution. Robo-advisors, on the other hand, can automate tedious activities that seasoned investors would be involved in.
Prediction # 3: cryptocurrencies will go mainstream
Although cryptocurrencies are still a foreign word for many people, they have been a hot topic around the world for the past two decades. Cryptocurrencies like Bitcoin use blockchain technology to achieve decentralization, transparency and immutability in an online banking universe. However, some people may not be quick to trust cryptocurrencies, which in the past have been notoriously volatile and require government regulation.
As the world continues to move towards financial exchange systems that reward convenience, the blockchain-based digital currency is a viable avenue for the future of money. Big banks, accounting firms, software companies and the government have invested millions in cryptocurrency research, or at least blockchain projects. “Will cryptocurrencies help us achieve a just cashless society, or will these idealistic plans be too difficult to implement and lead to more inequality?
Prediction # 4: Countries are moving towards a cashless society
Many countries are moving towards digital payments instead of cash. While it sounds futuristic to live in a world with no physical money, given the ease and convenience of digital payment systems like Apple Pay, it's not hard to believe. There are important privacy and anti-discrimination issues that business leaders need to consider as they move more towards a cashless society.
Some developed countries live cashless lifestyles faster than others. For example, European countries like Sweden use digital transactions for 98 percent of the country's trade. The potential benefits of digital payments infrastructures are exciting, but countries will not move quickly towards a cashless society.
Prediction # 5: Data Driven Currency Is Growing Fast
Data-driven money that can be programmable may seem alien, but it also may not be as advanced or far-fetched as you think. We live in a global society where surveillance capitalism is rampant 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 is natural that the future of money will contain data. In the 2020s, data-driven money will open up new opportunities for millions of people. Indeed, researchers at top universities have indicated that data is a currency in and of itself these days.
Prediction # 6: Money management is getting more targeted
In the next decade, new developments in the fintech industry are likely to make our money work more for us and our values. With the advent of impact investing and the purchase of beliefs, a younger generation of investors are more focused on their money, and they want their banks to reflect that. As the bank gets rich with your money, not only may your money not work completely for you, but it may actually work against you.
Passionate investors grapple with issues like 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 money wherever they see fit and typically make a significant profit. This means that a bank could invest your money in initiatives that you don't really support. Nowadays more and more people are becoming aware of this mismatch between their values and their spending / investments.
Take a look at our graph below where we outline some interesting points about the future of currency exchange. Given how much money has changed in the last century alone, it will be fascinating to see what the future might bring.
While security and cost efficiency are important, we cannot ignore that the future of money is digital and data driven. With the ability to be less stressful about managing their finances, whether it be budgeting groceries or setting up automatic savings, people love the convenience that emerging forms of currency promote.
Sources: Forbes | CoinTelegraph | Capital.com