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Digital money has come a full circle

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By Naveen Surya – Managing Director, Itz Cash and Chairman, Payment Council of India

The 2011 American dystopian science fiction thriller ‘In Time’ has a very interesting snip which depicts an ultramodern time frame wherein humans live in an unlimited fashion, there is no death on account of diseases or any misfortune, and where people stop aging at 25. And it also refers to a period when time will be equivalent to money and it will be in your hand and hence one will have to buy time to live. Thus making the rich immortal while others fight to live. Though the movie is an extremely ambitious science fiction, the illustrations presented leave us enough food for thought as to if virtual currency is just a fad or is it where our future lies?

In this era where crypto currencies such as ‘Bitcoin’ is being contemplated, and countries are expanding their information technology businesses to recognize virtual currencies as having a function similar to real money, it won’t be long until the physical cash that we are invariably dependent on vanishes into thin air. Money will be invisible or virtual as they refer it to and that will be the way the world will perceive money in the future. And this perceived future could be anywhere around 2025 or 2030 or even 2050.

Now, though this concept seems to be very futuristic, we need to realize that a lot of it is already happening. With the internet and mobile becoming the core elements of our lifestyle there is a high degree of disruption already occurring in major areas of business and financial services. Digital innovations are now challenging the conceptual and practical limits of the traditional financial system and reshaping the value proposition they currently offer.

In recent years, the payments industry has also experienced a high level of disruption with the surge of new technology-driven payments processes, new digital applications that facilitate easier payments, alternative processing networks and the increased use of electronic devices to transfer money between accounts.

Globally an array of virtual currencies has emerged in the recent decades. Catalysed by technological progress, consumer behavioral patterns and the need to infuse high-end convenience have already got the physical currency to disappear. A lot of this physical money has already moved to cards, wallets and others which portray a clear drift of the physical making way for the digital and more and more people are now adapting to this trend which in turn is accelerating the uptake of newer money alternatives.

With technology growing as the key enabler for the financial services sector, the digital revolution is transforming the way customers are accessing the financial products and services. With technology focused start-ups and new e-commerce entrants ushering in a new line of innovation, the market activities are now redrawing the competitive landscape steering major disruption within the traditional value chain.

But while we are intrigued to this so called ‘disruption’ which has currently become the catchall word to describe the current transformative phase, what one may fail to notice is that from barter to bitcoin, the digital currency has actually evolved out through a full circle. From barter to gold, to currency, to cards, to wallets and eventually to virtual, currency has undergone several changes albeit always adapting itself to the evolving needs of the world.

Money is destined to become digital and this conclusion emerges from its ongoing transition and its liable association to customer behavioral pattern. Money has been since long trotting on the path towards abstraction and looked at in terms of monetary spaces and hierarchies it becomes clear that digital money is not about new forms of money but rather about new ways of executing transactions with existing forms.

Money got invented for some reasons and as the technology is advancing in due course of time, it will completely vanish away. This is because from the beginning currency as we address it has only been fulfilling the purpose of serving as the medium of exchange for transactions and this usage pattern keeps changing with the change in society, social behavior, technology etc.

As Mark Zuckerberg rightly puts in “Virtual reality was once the dream of science fiction and so were internet, computers and smart phones.” While virtual reality is gradually gaining ground through gaming and marketing campaigns, a mobile device is what is all set to make VR more accessible to more people. Similarly, with the digital face of money gaining fame, the physical form of money is on the verge of extinction paving way for a ‘virtual revolution’.

As clients are becoming accustomed to the digital experience offered by companies such as Google, Amazon, Facebook and Apple, they expect the same level of customer experience from their digital services providers. Thus within the payments ecosystem, what one does is request a transaction and confirms it. Now while the fundamentals remain the same, the method by which one confirms by entering a pin, swiping a card, making a call or just by the touch of a button is what will continuously change and that is going to get more and more convenient depending on the then consumer pattern.

Our social behavior pattern is also following the trend and adapting to the digital flavour. So therefore it is the consumer who influences technology and again technology in turn influences the consumer’s behavioral pattern which at the macro level will be further accelerated by the government driving the whole initiative of cashless economy for the country. And with more and more products and services getting introduced into the system, this rub off trend is expected to grow even stronger. This has ultimately carved out a frictionless ecosystem, wherein you make payments, at the mere touch of a button.

Disruption is riding on the waves of technology with solutions that can better address customer needs by offering enhanced accessibility, convenience and tailored products. In this context, the pursuit of customer centricity has become a main priority reflecting a clear shift that is gradually getting crystallized into our very ecosystem.

With the current technological advancements and the mutual rub off impact nurtured between consumer and technology, the digital ecosystem is well poised to conquer new frontiers, to be present every time and everywhere a consumer transacts. Being at the centre of the scheme of things for the consumer and on the back of reach, brand recognition, access to data and favourable regulatory environment, the digital payments industry is already calling itself disruptors and redefining the traditional market picture.


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