Phone Carriers Will Become Banks


I was recently thinking at this whole “consumerism” thing from the perspective of how easy it can get for people to buy stuff. Whereas one can carry an x amount of money in their pocket, let’s call it immediate disposable income, the dilemma for banks is obviously how much credit they can give to each of their customers (assuming via a credit card as the only way) in relation to how much money they earn.

Hoping this simplistic version of reality helps me explain my starting point I will move into how else a person could have access to money that we don’t really own in the first place (credit). Then I went into looking how many people actually own a credit card, for which I took the U.S. since everyone is familiar with our fellow Americans and knows that in a way or another they define trends and expectations that eventually the rest of the world tries to follow follows.

It turns out that, according to data from the U.S. Census Bureau, today there must be something around 181 million Americans who hold at least one credit card, around 60% of their population. We can consider also that they might own more than one per person, but still is the same individual.

What else could somebody own in order to have access to some way of credit? What is something that we own and carry at all times with us that can help as a means of electronic transaction?… evidently our cell phones. Then of course, I’m not saying anything new about the possibility of actually paying something with your cell, because it is already happening with apps like Google Wallet. But (and this is a big BUT) this is linked again to a bank credit card/account and not to a lender other than a traditional commercial bank.

Now let’s look at this chart:

The first thing I will highlight is the fact that for instance in our U.S. example (but also Italy), there are actually more cell phones per person than credit cards in that country. Think about Apple or any kind of electronic platform that offers products that are actually digital, like music, photos, vids, ringtones, etc. The sales of these companies have increased exponentially over the last years following the iTunes model… and will continue to do so.

Coming back to the credit and disposable income statement, the thing gets a little more interesting speaking about consumerism in developing countries where it can be more difficult for people to own a credit instrument like a card. But evidently as seen, it is more likely that people in countries like China or India have access to credit (micro credit), though their cell phones bill, hence, substituting the traditional banking model. To buy, certainly not houses or cars, but perhaps metro, cinema tickets, Mc Meals, who knows.

Can a purchase of a low priced digital item can replace the consumption of, let’s say, a microwave? On a one to one basis evidently not, but the point again is the fact that for the famous GDP (which is nothing but the overall consumption of a given country), the only thing that matters is that people spend, spend, and spend to keep the cart moving up the rollercoaster rail. This is something that India, China and other developing economies are doing for the world right now, where even if they spend a few cents, multipied by the number of population that are putting those cents in circulation turns out in a huge amount of overall consumption.

So unfortunately, as long as the whole system continues to be designed to driving us into easier ways to give away our money (sometimes even unaware of it), we would never reach a point in which we can really understand that spending on things that we don’t even need is not a really sustainable system at all in the first place.

Yes, it is easy to spend money (even when we don’t even own it)… and it will continuously become easier to do so, the only difference is that from some point on we will start being afraid, not about using our credit cards, but our mobile devices instead.

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2 responses to “Phone Carriers Will Become Banks

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