The End of Banks & Banking?
Nope !!
Bitcoin maximalists said years ago, that the end of banking was nigh. The same trope was repeated when DeFi became a thing. Now it is being repeated again with CBDCs or Central Bank Digital Currencies. My web scrapers have picked up several articles saying that with a CBDC two things will happen. The first is that financial privacy will be incredibly eroded with the government knowing your financial expenditures down to every time you buy a pack of gum for a dollar. This will be true. The second reason that they give for the demise of banking, is that if you are able to have a mobile wallet on your phone, why would you need a bank account? With the current interest rate paid on savings account (almost zero) and with fees required to keep the account, you will be better off keeping your own money in your mobile wallet.
The bottom line is that banks are not going away and will not go away, at least in the next 50 years. There are huge problems with keeping all of your money on your phone, or in something like a Trezor hardware wallet. Here are the issues:
Lose your phone, lose your money. There will be huge further incentives to steal mobile phones.
Your phone goes dead and you can’t pay for anything.
Apple or Android changes their privacy policy and you get data-raped for every penny that you spend using their devices.
The power goes out and you can’t buy anything. (I just went through a major storm where the power went out, and merchants were operating in the dark, taking cash only — or were taking down credit card particulars for later processing. If they screwed up and over-charged you, you have recourse with the credit card company. Try to do that with a mobile wallet).
If you lose access to your digital cash, it could be gone forever, just like the millions upon millions of dollars of cryptocurrencies that are locked up for good because they went to an address without a retrievable private key.
If your wallet provider (the company that wrote the code for your wallet) gets hacked, there isn’t anything like the deposit insurance that banks have to protect your funds.
The biggest reason of all though, is that it will be a pain in the butt to manage your own bank account, and the logistics required to go with it. Cash is too much easier and more anonymous. I believe that in spite of all digital methods, cash will never entirely go away for a myriad of reasons too numerous to mention here.
Currently, crypto payments providers that process payments for merchants, all require that you have an exchange wallet. That is like a bank account. Of course you can do person to person payments with the business owners, but that doesn’t work for big enterprises. They too, will need account management. The biggest factors that banks provide for account management is security. If you get ripped off on your credit card, the bank can reverse the payment. The bank will also monitor payments and can put a stop to payments that are suspicious. The example in my case, was I had just bought gas on my credit card in my home city, and twenty minutes later someone was trying to buy gift cards with my credit card number in Los Angeles. My card was skimmed at the gas station and the Visa payments system flagged and stopped it.
Businesses will always need banks as well. There is no way that a public company will get a million dollar loan from some unknown entity who is lending some of his crypto stash to hide the fact that he was breaking bad on the side and needed to launder the money from it — even at a good rate.
We are in a huge transition in the payments industry and even in money mechanics. But there will always be banks, primarily because they are needed to grease the wheels of commerce. They definitely will transmogrify banking and Central Bank Digital Currencies will be a real thing.
However, the changes wrought will always bring new opportunities. I myself will announce very soon, my patent application to change cryptocurrency into something new that will open up hundreds of possibilities in the way that value is transacted in our Brave New World. Stay tuned.