Digital platforms are not new to consumer finance. Three decades ago ATMs were linked digitally to give consumers 24-hour access to banking services. What is changing now is the ease by which consumers can operate – cashless and through apps that make conventional banking obsolete.
And start-ups, deploying global platforms and leveraging data such as credit scores, provide instantaneous services such as loans to consumers.
These companies are changing the business world with their accessibility and speed. For example, Venmo is a payment app that allows users to link there debit card, credit card, or bank account to their Venmo profile and transfer money to other people with ease. It also has a social media feature, with a newsfeed of their friend’s transactions.
It’s moving us a step closer to a cashless society. In the past, FinTechs like Venmo would have had trouble reaching a reasonable amount of consumers, but now nearly two-thirds of Americans own a smartphone – a digital platform in your hand.
Venmo alone has reported growth at quarter-over-quarter rate of 62 percent and is predicted to reach $90 billion in payments by the end of 2017. Venmo’s transaction volume has even surpassed that of Starbucks.
Just like “Google it” or “Get an Uber,” “Venmo me” is now becoming part of the lexicon.
But where in the past the early adopters came from the business world, the Venmo movement is led by millennial. It is now typical for young college aged people to rarely touch paper money. That’s because in under a minute they can transfer money via Venmo to a friend. And all the friend has to do is transfer the cash from Venmo to their account.
Which probably means that Western Union shouldn’t be buying green bananas. Founded in 1851, when you interact with Western Union you get the feel it’s technology is stuck in a past century. Recently I tried to send $2,500 overseas via Western Union. I received no less than five emails and phone calls telling me my transaction was “on hold, wait approved, no, still on hold, back on, wait, I need more information.”
Western Union’s money transfer service seems destined to go the way of its telegram service, which at one point was integral to society but was finally discontinued in 2006 – you know, a decade after email became popular.
Think of Western Union as the canary in the coal mine: it’s inevitable demise reflects how more modern, user friendly services have embraced the apps-based digital platform technologies that are reshaping how we move to a cashless society.
And the day we do, we won’t be announcing it with a telegram.