Home / Opinion / Cash losing to virtual money

The 2011 American dystopian science fiction thriller, In Time, depicts an ultra-modern time frame in which humans don’t face death on account of disease or a misfortune, and where people stop aging at 25. Time is equivalent to money and one has to buy time to live. So, the rich are immortal while others fight to live. Though the movie dwells in 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 are 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. Money will be invisible or virtual 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.

Though the concept seems to be futuristic, a lot is already happening. With the Internet and mobile phones becoming 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 surge of new technology-driven payments processes, and 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. Catalysed by technological progress, consumer behavioural patterns and the need to infuse high-end convenience, physical currency is disappearing. A lot of this physical money has already moved to cards, wallets and other modes. More and more people are adapting to this trend, which, in turn, is accelerating the uptake of newer money alternatives.

With technology being the key enabler for the financial services sector, the digital revolution is transforming the way customers access financial products and services. Technology focused start-ups and new e-commerce entrants are ushering in a new line of innovation, and market activities are now redrawing the competitive landscape.

But while we are intrigued about this so called ‘disruption’, what one may fail to notice is that from barter to bitcoin, the digital currency has actually evolved 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 with customer behavioural patterns. Money has been since long trotting on the path towards abstraction and looked at in terms of monetary spaces and hierarchies. It is becoming clear that digital money is not about new forms of money but rather about new ways of executing transactions with existing forms.

Money was invented for some reasons and as technology advances, it will completely vanish. This is because, from the beginning currency as we address it, has only been fulfilling the purpose of being a medium of exchange for transactions and this usage pattern keeps changing with the change in society, social behaviour, technology, and other factors.

As Mark Zuckerberg put it, “Virtual reality was once the dream of science fiction and so were Internet, computers and smart phones." While virtual reality (VR) 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 fading.

As clients become 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 as well.

In 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. It is going to get more and more convenient depending on the then consumer pattern.

Our social behaviour pattern is also adapting to the digital flavour. The consumer influences technology and technology, in turn, influences the consumer. At the macro level, this will be further accelerated by the government driving the 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. Ultimately, a frictionless ecosystem will be carved out, where you will 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 the main priority, reflecting a clear shift that is gradually getting crystallised.

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 a disruptor that is redefining the traditional market picture.

Naveen Surya, managing director, ItzCash Card Ltd.

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