For decades, banking was a mundane, routine task. You visited a local branch to open or close accounts, deposit, withdraw and transfer funds. If you wanted to apply for a mortgage or loan, you made a personal appointment with a banker.
Now, you rely on your smartphone and online banking to complete most of your transactions. Technological advancements have made online banking and mobile banking fast, flexible and convenient.
“Banking is a notoriously slow-moving industry, even in the technology age, so there likely won’t be a radical shift in the products and services offered in the next ten years,” said Mike Catania, an engineer, mobile-payment app developer and founder of PromotionCode.org.
Although it’s difficult to predict the rate of change in banking practices, here are six banking services that might become obsolete within the next decade.
1. Bank Branches and Bank Tellers
A decrease in physical bank branches over the next decade is plausible given the recent frenzied introduction of new technology to financial transactions and the changing customer demographics. Local bank branches are staffed by bank tellers who, although they are the consumer-friendly public faces of the financial institutions, could quickly be on their way out as well.
“The role of tellers has markedly decreased over the past 15 years and the next 10 years will eliminate most of the jobs in the form of more advanced ATMs,” Catania said. The number of teller jobs is expected to decline, according to Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, 2016-17 Edition. Specifically, the 10-year outlook from 2014 to 2024 is that employment of tellers will decline by 8 percent.
“The digital transformation of society is driving a significant change to enterprises of all types — including banks — to ensure that they adapt to the evolving preferences of their current and future users,” said Ricardo Villadiego, CEO of Easy Solutions, a company providing fraud prevention and detection solutions to financial institutions. “As millennial and future generations become the majority of the user base of a bank, this transformation will be accelerated in the institution to keep pace with the preferences of the new majority … [who] like to get things done rapidly and efficiently and don’t necessarily value the personal touch of previous generations.”
2. Passwords and PINs
It can be annoying to remember different alphanumeric passwords and PINs for all your online bank accounts, plus you’re required to change them regularly. However, pesky passwords and PINs are rapidly becoming features of banking past.
Many big banks, such as Bank of America, Chase, Wells Fargo and Citibank enable customers to access their accounts via various biometric methods including fingerprints, eye scans, voice recognition and facial contour recognition, according to The New York Times. Financial institutions believe these new verification methods offer increased security over passwords that can be hacked. So, in favor of these more secure methods, passwords and PINs could phase out completely in the next 10 years.
3. Checks and Paper Statements
For decades, people paid their bills with paper checks, whether in person at the grocery store or by mail to the electric company. Commercial banks mailed monthly paper statements to customers with checking accounts, as well, before gradually offering customers the option to obtain account information via phone.
The next step in the financial services evolution was online banking and, more recently, mobile banking. You can now view all of your banking statements, and current account balances, online or from your phone no matter where you are.
Although you can still get paper checking account statements, many banks such as Citibank and Bank of America will provide them only if you pay a fee, which might be $5 per statement. In addition, your paper statement previously included the physical checks that you wrote during the monthly period. Now, even if you receive statements in the mail, most banks do not send the canceled checks. You can get copies from your bank, but they might charge a fee. So, it’s inevitable that banks will phase out the use of all paper items altogether before long.
This one might be hard to believe, but a whopping 62 percent of Americans think the U.S. will be a cashless society within their lifetime, according to a 2016 Gallup poll. Services such as PayPal’s Venmo app, Apple Pay and Square Cash facilitate real-time money transfers between people using a mobile app. And big banks like Chase, Wells Fargo, Bank of America and U.S. Bank are elbowing each other to get into the person-to-person payment funds transfer market also, reported the New York Times.
The use of papers bills and coins might decrease over the next 10 years, although it’s hard to imagine that hard currency will disappear completely. Who knows, maybe even gumball machines will start to take mobile payments, too — or at least credit cards.
5. ATMs and Debit Cards
As we increasingly become a cashless society, ATMs will likely become extinct as well. Debit cards are the current method of access to ATMs, but customers already use their smartphones rather than machines to deposit paper checks — while they still exist.
“I believe that the debit card will become a piece of financial services history within the next eight to ten years,” said Patricia Hewitt, a strategic advisor to the payment industry. “Replacing it will be applications that transfer depository funds on an as-needed basis in real or near-real time.” In fact, Hewitt predicted there will be little need for services such as ATMs because most cash transactions will be handled using apps.
Other financial industry experts also anticipated the demise of debit cards and PINs, particularly due to fraud concerns. “A static PIN can be stolen and reused, and cards can be cloned easily by fraudsters,” said Shane Stevens, director of omni-channel identity and trust solutions at VASCO Data Security International, Inc., a company that provides two-factor authentication and digital signature solutions to financial institutions.
6. Traditional Loans
Historically, to apply for a mortgage, auto or other personal loan, customers had to go to a physical branch, meet with a loan officer in his small office and fill out stacks of paperwork. Next, they had to nervously wait for approval from another bank department. This process seems to be falling by the wayside.
Peer-to-peer or P2P lending debuted in 2006 to connect borrowers and lenders via an online platform for personal loan amounts typically ranging from $1,000 to $40,000. The current industry leaders are Lending Club and Prosper, with many other P2P competitors ramping up. Even SoFi, originally known for student loan refinancing, offerings have expanded to mortgages and personal loans.
Lenders such as QuickenLoans and Guaranteed Rate offer home mortgages with a completely online process, from application to approval and closing, as well. So it would seem like bank loan officers might become a thing of the past with more and more P2P opportunities on the rise.
These coming shifts in how we interact with financial institutions will likely be met with resistance by some. But those who accept change in the banking industry and adopt new technologies will be the first to reap their benefits. Aren’t you glad you no longer have to go to your bank to cash your paycheck every couple of weeks?