Fianna Fáil senator Malcolm Byrne says traditional banking is clearly disrupted and it’s important we get ahead in education and upskilling to cope with the changes.
RECENT ANNOUNCEMENTS BY Bank of Ireland and Ulster Bank of largescale branch closures and significant numbers of redundancies led to news headlines in recent weeks and attracted much public commentary, including along how these were yet more nails in the coffin of rural Ireland.
The standard political press release or speech was to condemn the banks (and sometimes the government as well) and call for a pause or reversal of these decisions.
However, we need to be honest with people. Those branches are not going to reopen and indeed, by the end of this decade, the model of retail banking that dominated on our main streets for generations will be finished.
The switch to digital banking and the use of new technologies will mean that going into a bank to do a paper transaction will be viewed much like going into a chemist to develop a roll of film – a thing of memory.
Embracing new technologies
Technology is changing everything that we do at an unprecedented pace and rather than stand like Canute trying to resist the tide, we need to shift emphasis to upskilling and reskilling of our citizens to be prepared for and indeed, shape the changes we are experiencing.
We have seen the rise of digital banking services that primarily operate on mobile phones. Two of these, for example, are Revolut, which has over a million customers in Ireland while N26 has over 200,000.
We are shifting to become a society that does not use paper cash (the pandemic has hastened that change). In China, companies such as WeChat Pay and Alipay now effectively operate as the digital wallets for hundreds of millions of people.
Two young Irishmen, the Collison brothers founded Stripe, just over a decade ago: the online payment processing service, now worth over $100bn, are approving loans using artificial intelligence and investing in businesses engaged in carbon research and capture.
Blockchain is a digital ledger that securely records transactions and this technology will soon render many traditional trusted intermediaries, including banks redundant. Peer to peer lending and crowdfunding provide online alternatives to raising money through bank loans. (This is a possible direction for community banking and credit unions.) The use of biometrics (such as a swipe of our fingerprint or the use of advanced voice recognition technology) allowing us to pay for things is already here.
We should acknowledge the wider debate around the environmental footprint of Bitcoin and similar cryptocurrencies, which is an issue that needs to be addressed. For now, however, these disruptors of the financial ecosystem are here to stay.
What is interesting around the innovation in the banking and finance sector is that almost all of the innovation globally is not coming from the traditional banks.
As in so many other sectors, if banks don’t shift to be the disruptors, they will become the disrupted. Bank of Ireland, AIB and others will be the Kodak film processors of the 2020s.
These changes are not just taking place, of course, in banking. In travel, for simple transactions, we now book it online rather than through a travel agent. We increasingly get our news on our phones and tablets as physical newspaper sales continue to decline.
Covid-19 has led to further growth in online shopping. Revenue from eCommerce for retailers in Ireland grew by a staggering 159% in 2020 while An Post reported a 300% increase in deliveries for Christmas 2020 compared to 2019. Just Eat is now delivering food by drone in Oranmore.
Educating our future workforce
Automation, artificial intelligence, machine learning: there will be few jobs or communities that will not be impacted by the revolution in technology that will change irrevocably how we live and work.
This will lead to resentment by some and a sense of being left behind. There are dangers here. The disappearance of traditional ‘good jobs’ has political consequences. Populists will highlight these situations and exploit them for their political ends, but they don’t provide solutions.
I feel genuinely very sorry for the dedicated staff who worked at bank branches that are closing and for those older people for whom having over the counter banking transactions are familiar and desirable.
While politically easier, it is wrong to offer false hopes that an old banking model will return.
What we as politicians and decision-makers need to do is to prepare our citizens by reskilling and upskilling all of us to be ready for technological change. We need to imagine how we can harness new technologies to improve our lives and communities.
Technology can liberate rural Ireland but also underdeveloped urban communities. The scale of investment in research and in further and higher education provision though should not be underestimated.
If we look at how we adapted through this pandemic, we found that we had to use technology to work, to learn, to teach, to order shopping, to communicate with our friends and family. It exposed some digital divides that we need to address. But we all learned to do certain things in a different way.
We shouldn’t be scared of the possibilities of technology but government needs to work with educators and business to manage the huge and ongoing upskilling programme that we now require. This is the true mission for the new Department of Further and Higher Education, Research, Innovation and Science.
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Workers, students, citizens, businesses will be well served making those preparations now.
Malcolm Byrne is a Fianna Fáil Senator.