Douglas Carswell's Blog

Is dinosaur banking doomed?

Around about 65 million years ago, dinosaurs dominated the earth much as they had for the previous 150 million years. Yet it turned out that the future belonged not to them, but to the decedents of those furry little mammals, scurrying around unnoticed in the undergrowth.

I wonder if something similar might be about to happen with banks and money.

Giant banking beasts have ruled for as long as anyone can remember. Whether taking money out the cash machine, using a debit card or even a cheque book, paying for things boils down to some kind of bank to bank reconciliation.

Does it have to always be this way? A system of payments conducted through banks comes with some pretty costly architecture attached. Quite literally, if you think of all the branches. Then there are all those bonuses, and of course the salaries and pensions to be paid.

Perhaps lurking in the digital undergrowth is a nimbler ways of doing things? 

Already we can see that in parts of Africa, where the banking beasts never got established quite the way they did in the West, mobile phone credits serve as a system of instant, phone to phone payment. No bank required.   

What if O2 or Vodafone were to innovate with a similar system here? Perhaps a non-banking player, like Tesco, might use a system of online credits, allowing customers to pay not only for groceries, but utility bills perhaps? Come to think of it, why presume that the units of payment need necessarily be in pounds? 

Barclays new pingit app makes me think that some banks recognise that things are about to change, and that existing banks must either adapt or die. 

Of course, it took a cataclysmic external shock, in the form of a meteorite impact, to end the age of the dinosaurs. With zombie banks being kept afloat by central banks doling out bogus credit, what kind of external shock might it take to open up the ecological space to the nibbler way of doing things?

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