How the Internet Will Change Banking

For better or for worse, the internet has changed how we do just about everything.  From changing how we educate, or connect with friends, shop, or get our news, the internet has changed the world, in ways both big and small.  Now, according to some experts, the internet will also be changing the way we bank in the not too distant future.  According to author Douglas Rushkoff, digital technology and the rapidly changing digital economy is about to change the entire landscape of banking.

The idea is that as the internet has taken the middle man out of many of our transactions, it disrupted many industries, but banking was able to remain unscathed by the changes.  However, it is predicted that this will change as people turn more to direct trading over the net.  For example, in the past if someone created a product, it could then be sold to Wal-Mart, who would then sell the item to the individual consumer.  However, the internet has allowed people to have direct access to the potential customer, thereby cutting out the intermediary party.  This type of trading in peer-to-peer networks disrupts the top-down model control of money that is currently enjoyed by banking systems.  It is projected that In the future, there will be several alternative forms of money that will be able to compete with central currency. These alternative forms of money will be more transactional than savings oriented. Some examples of these will be TimeDollars, LETs and other types of local exchanges.

It is suggested that while these local currencies will compete with banks, they are unlikely to be able to completely take over and replace the current system.  This is due to the fact that most people will still want items beyond what can be produced in the local marketplace.  Instead, it is more likely that banks will adopt and promote the use of both local and central currencies.

[Image via louisville.timebanks]