Bank 4.0

3Embedded Banking

There are better, faster, more convenient, less costly payment methodologies in place, but with those comes the technology-adoption hurdle that a lot of companies just can’t get over… [The United States] have probably the most antiquated payment system in the whole world. It would be much harder to get a mandate to eliminate checks from a cultural standpoint, but also from a central bank standpoint. —Tom Hunt, Director of Treasury Services, Association for Financial Professionals

For many of the approximately 700 million users of WeChat Pay in China, they don’t have a debit card they use regularly—their primary value store or payment vehicle is either cash or their phone. Increasingly in urban China it is only their phone, and even if people do have a bank account, they’re not using it other than for transfers, top-ups and withdrawing cash. The primary challenge for banks is that once money goes into the WeChat or Alipay ecosystem, it rarely leaves—and banks have zero visibility of it once that happens. The battle for mobile payments appears over in China. Soon the battle for deposits will be also.

This is not just about a chat app that has been adapted for payments. We can see through first principles that the two-and-a-half billion great “unbanked” will more than likely not need so-called “real” bank accounts in the future. In fact, by 2030, the bank account itself is likely to be just a value store on the phone for the vast majority of consumers who ...