Legacy banking institutions are losing their grips on the wealth flowing around this planet nearly every day. In fact, banks are losing touch with the finance world quite fast actually, and society doesn’t seem to care. Millions upon millions of dollars are currently not seeing these bankers hands anymore, and there are some good reasons why.
A cashless society is becoming more imminent, growing stronger in certain regions but showing progression everywhere. In Europe, where this trend is most prevalent, conventional banking is becoming a thing of the past. A popular UK finance publication suggests that traditional finance businesses are being threatened by online payment solutions including PayPal and Bitcoin. The media site reveals research from EYs financial technology division showing that online banking is threatening finance organizations everywhere. According to them, 31.8% of Britons are now using internet provided banking solutions over in-house legacy banks. This cashless society concept is dominant in the United States, China and most regions around the world with a modern economy.
Some in finance-land have called the online payment boom a hype just as they view other emerging economies within the globe during current economic hardships. Due to banks being guided by third party arbitration people are choosing not to do business with them. For instance, significant data breaches are causing people to have distrust in these organizations collecting personal information. Just this year alone consumer banking information was compromised leading to 100 million peoples accounts in jeopardy. In the online Bitcoin economy, startups are showing traditional banks that zero-knowledge systems are working and ceasing the concept of data breaches. Society is tired of losing their identities to hackers and malicious attackers because governments want banks to collect private information. Banks are losing their grips on this data, and people are now choosing alternative measures such as cryptocurrencies because of this.
Banks are also not taking cash from hard working citizens leading to more wealth steering away from their services. Cannabis entrepreneurs are finding it very difficult to deal with traditional banking institutions today ever since it was legalized for recreational use in some states. Currently, at the end of 2015 cannabis businesses still cannot find a place to take their money. Advocates trying to create a Marijuana credit union in Denver are continuously being denied by authorities from the Federal Reserve. This is leaves companies operating in this industry exposed to potential robberies and unsafe practices holding vast amounts of cash. Not only does the Federal Reserve want nothing to do with cannabis cash but multitudes of banks want nothing to do with it either. This precedent is not just in Colorado but also in other areas where cannabis has been democratically legalized. In Oregon, banking institutions are also denying their services to these businesses leading them to choose alternative methods. These options are online banking alternatives and primarily operating on cash reserves leaving the banks on the sidelines.
These equations are gradually progressing towards banks losing the money supply. This has caused many of these institutions to downsize, and people are losing jobs. Many reports suggest 2015 is not a good year for banks, and many of them may continue with this downwards trend. Employment in the industry is getting harder to find, and jobs are being cut in this sector on a regular basis. This past November Bloomberg details “Europes biggest banks are cutting 30,000 jobs” and explains how the finance workforce is shrinking drastically. Bloomberg has also revealed this year in a study that finance executives are leaving their bank jobs and jumping head first into this emerging tech sector. Cryptocurrency, Financial Tech, and distributed ledger protocols are changing the dynamic of the way we handle our finances. This enormous shift is leaving banks by the wayside and it is due to their own actions.
Banks have initiated much distrust in their services from the beginning and have shown a vast amount of transgressions toward society after 2008. It was more apparent than ever that banking collusion has not worked out to the common people’s benefit. It’s very coincidental that after this economic crash of 08′, Financial Tech, Bitcoin, and zero knowledge peer-to-peer concepts have all risen in popularity. The banking industry is being more disrupted with every passing day, and this is not due to those occupying the financial districts with signs of protest. This is due to the innovators and technologies like Bitcoin bifurcating the financial economy into the hands of the world’s citizens.
Banks may dismiss these new businesses as hype, but that’s because they are losing revenue and are scrambling to figure out how to stem the rising tide. Costly actions such as exorbitant fees, denying people the right to operate with cash, and shoddy data security, are all factors that are diminishing the public’s confidence in traditional banking. As a result, this is leaving these institutions with less and less. And as more and more people become aware that there are now better alternatives, we will likely see more and more bankers fleeing this sinking ship.
What do you think will happen to legacy banks this year? Let us know in the comments below.
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