Are Banks a Thing of the Past? Do people use banks anymore?
What adjustments would you have to make to your business, if physical banks closed their doors today?
A large amount of people today no longer carry cash or write personal checks when making a purchase. Whether we’re using a credit/debit card or processing a payment online, the need to visit a physical bank is starting to dwindle.
We see it in Science Fiction movies all the time, a society that revolves around some sort of virtual or credit-like currency. Sometimes these characters use a little card or bio-metric (thumbprints) readings to make purchases.
The FDIC (Federal Deposit Insurance Corporation) which insures banks and their depositors, has statistics on their website that they update pretty frequently.
As of May 8th, 2014 – The FDIC website reports that there are currently 6,728 FDIC-Insured Institutions. From January 1st of this year, until May 8th, they have reported that 94 institutions are gone due to closings or mergers. In a little more than 4 months, 1% of the banks that we had at the start of the year, are no longer around.
Last December, CBS news’ Money Watch put out an article about this; reporting that the number of FDIC Insured institutions fell to 6,891 at the end of September 2013. They cited that many of the closed institutions are small banks, struggling to keep up with the policy changes, economic hardships, and increased workload due to changes in security requirements.
So this means, in 6 months, we’ve lost 163 financial institutions. I have a feeling that number will continue to drop. The need to visit a physical banking location is becoming less and less.
The biggest source of money transactions are typically businesses – but we very rarely ever deal in direct cash (unless you have a consumer based business of course – restaurant, retail, etc.) There are not many business needs that require an employee to physically be in the bank.
If the physical paper money system eventually disappeared, I think that would be the end of physical banks.
What would have to change in your business if physical banks no longer existed – leave a comment and let us know.