As spenders and savers, what does the future hold for us? Over the past 30 years, the way in which we bank and use money has changed drastically. While the pace of change has started to slow, there are still exciting times ahead.
In 1986, when The Independent was launched, few could have anticipated that in paying for goods and services, we would one day be able to “tap and go” simply by brandishing a piece of plastic or, even more outlandishly, something called a mobile phone.
The internet has changed the way in which most of us bank and spend, and the “millennial” generation takes such convenience for granted. But that won’t do for people coming of age in “Generation Z”; born in the mid 1990s, they will almost certainly soon be embracing the internet of things – a technology that will let gadgets talk to each other.
Sounds frightening? I’m assured they won’t be plotting to overthrow humans but will talk to each other with the sole aim of making our lives easier. So our fridges will tell our phones to order fresh groceries when stocks are low, and our cars will tell our heating systems to warm up the home when we’re a few minutes away.
I experienced a little of this in Dublin this week when I visited MasterCard Labs. The centre is one of the company’s eight innovation hubs across the world, focusing, MasterCard says, on fresh ideas to improve customers’ lives – or at least make it easier for them to spend money.
Garry Lyons, the company’s chief innovation officer, is very enthusiastic about the changes ahead. When we met, he had three items of wearable technology on his person and soon produced a fourth – a garish ring that is linked to a phone and glows in different colours according to who’s calling. It can also be used to tap and pay and is one of thousands of ideas considered by the lab every year.
“This isn’t actually my style,” he said of the ring, but he beamed proudly when displaying his wristband. It uses the throb of his own heartbeat as an identifier, rather than making him remember passwords or PINs. That certainly piques my interest - remembering passwords is a pain.
“It’s part of a range of new wearables we’re looking at,” Mr Lyons said. “We know that people have trouble remembering passwords, and using biometrics can help avoid needing to remember a complicated series of letters and numbers.”
The wristband uses electrocardiograms to measure your heart rate, and when you pay, it transmits a signal to a till to verify your identity. Your electrocardiogram reading is unique, so if someone else takes your wristband, they won’t be able to use it
This summer the company is also launching “selfie pay” in the UK; it will allow you to take a picture of yourself to verify your identity. Fingerprints are already being used for the same purpose and further ahead is iris technology.
All the big financial companies are striving to use biometrics to make banking easier. Anthony Thompson, the man behind Metro Bank and the soon-to-launch online bank Atom, said: “In the future you won’t have to remember your own name to bank with us. You’ll be your own unique PIN code.”
The future is digital, with technology driving better ways to manage our money and even financial advice increasingly being delivered by artificial intelligence. The drawback is that if you’re not plugged in, you’ll miss out, raising the prospect of a two-tier economy of digital “haves” and “have nots”. Except it’s not just a prospect: millions already have to pay a premium if they can’t or won’t pay bills automatically.
The way we were: 30 years of change
The year in which The Independent was launched, 1986, marked a revolution in high-street finance as well as the newspaper industry. For the first time banks were allowed to sell mortgages, which revolutionised the way in which home loans were sold as real competition entered the equation for the first time.
Back then – incredibly, it seems now – we were still three years away from the launch of the UK’s first telephone bank, First Direct.
And then 1990 marked the peak year of cheque use, with more than 11 million written each day. Remember cheques? Most millennials won’t even have any idea where their chequebook is now. In fact, cheque use has slumped by more than 75 per cent since 1990.
Meanwhile debit cards are, surprisingly, younger than The Independent. The first didn’t appear until 1987 when Barclays launched its Connect card. The new breed of flexible plastic soon swallowed up the old cheque guarantee cards.
By 1997 the Nationwide was offering the first internet banking service and in 2003 came chip and pin cards, followed in 2007 by contact less.