Deutsche Bank: Cash is Here to Stay. Cards will go Away.
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In 2016, John Cryan, the CEO of Deutsche Bank, speaking at the World Economic Forum in Davos, boldly announced “CashMoney in physical form such as banknotes and coins. More, I think, in ten years’ time probably won’t (exist). There is no need for it, it is terribly inefficient and expensive”. The panel was shared by Christine Lagarde, then head of the International Monetary Fund and Dan Schulman, President and CEO of PayPal. Lagarde spoke about the disruption presented by virtual currencies. Schulman said “MoneyFrom the Latin word moneta, nickname that was given by Romans to the goddess Juno because there was a minting workshop next to her temple. Money is any item that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular region, country or socio-economic context. Its onset dates back to the origins of humanity and its physical representation has taken on very varied forms until the appearance of metal coins. The banknote, a typical representati... More is absolutely digitizing. However, let’s not forget 85% of the world’s transactions are still in cash”.
Fast-forward to 2020. Christine Lagarde now presides over the European Central Bank where she will be signing billions of banknotes. Deutsche Bank – which is no longer headed by John Cryan – announces that cash will stay around for decades. As for digital currencies, they will lead to the extinction of cards, not cash.
The reports are based on a survey of 3,600 customers across the US, UK, China, Germany, France and Italy and forecast trends in cash online, mobile, crypto and blockchainAn unchangeable digital record where transactions are processed and verified by a network of independent computers rather than by a single referee. This decentralised structure has been described as an open distributed ledger. It supposedly enhances security as there is no single entity to be hacked. It also protects personal identity and guarantees that governments can’t block transactions or otherwise manipulate the payments space. The blockchain is the underlying technology supporting most ... More. The reports are in three parts; the third is not yet published:
- The Future of Payments -Part I. Cash: the Dinosaur Will Survive … For Now
- The Future of Payments Part II. Moving to Digital Wallets and the Extinction of Plastic Cards
“When people discuss the future of payments they tend to predict the end of cash,” the study states. “Our view is different. Not only do we think cash will be around for a long time, we see the transition to digital payments as having the potential to do no less than rebalance global economic power.”
Two-thirds of the people surveyed said they had considered increasing cash holdings given the economic uncertainty around the US-China trade war, conflict in the Middle East, and the potential effects of Brexit. The report also recognizes that cash has attributes which are unmatched by other paymentA transfer of funds which discharges an obligation on the part of a payer vis-à-vis a payee. More methods. It helps users remain anonymous and protects against cyberattacks. Buy over 40% say cash enables them to easily track spending and make payments faster. They find cash to be convenient, accepted almost everywhere, and secure.
To predict the future of digital payments, the authors turn to China, where the value of online payments amounts to three-quarters of GDP, almost double the proportion in 2012. Today, just under half of in-store purchases in China are made using a digital wallet, way above the levels in developed markets.
The authors are also confident about the potential for private digital currencies, pointing out that if the growth in blockchain wallet users continues to mirror that of internet users, then by the end of the decade, they will number 200 million, quadruple the current level.
Yet, that is barely 2.5% of the current world population. In 1950, Diners Club card president Alfred Bloomingdale foresaw a cultural and socioeconomic divide across two classes of people: those with credit cards, and those without. When that chasm emerges, “there’s going to be one hell of a split in society,” he said. Will that prediction apply to digital currencies?
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