Technology and Media

Cell Phones - hitting the wall while revolutionizing banking

The cell phone era of revolution and hardware/software innovation seems to have come to an end in the last few weeks as incremental evolution has taken over the previously hot and dynamic smart phone handset market.

With Blackberry’s Q10 and Z10 and its new operating system, iPhone’s OS upgrade and improvements to Android, we seem to now be at a stage where nothing more of significance can be developed – at least in the hardware.

The wall has been reached and smart phone ‘new handset’ sales have already started to level off and decline in North America.  BlackBerry’s new phones will be going on massive discounts in the U.S. to clear up pre-bought supply by cell phone service providers, and the latest and greatest Samsung smart phone, the super thin and faster Galaxy S4 has barely caused a ripple or stir.  No standard newspaper or popular magazine reviews. The subject is now almost passé.

And once thinner becomes the new ‘feature’, as with Apple’s ‘major’ focus last year for its desktop screen ‘breakthrough’, and the Samsung Galaxy S4, how thin does a monitor or handset really have to be?  Is  0.8 cm that much better or needed than 1.1 cm of depth?  And is not the trade-off between thinner and lighter VS stronger and more durable metal a fool’s game, as new smart phones require extra screen protection and drop protection cases that suddenly balloon their size to handsets of a half-decade ago.

So what is the future for this hardware industry, especially North America’s Apple and BlackBerry, and for    market investors (i.e., hotshot speculators)?

Answer:

1. Cheaper smart phones for the poor masses of Africa and Asia -- like the Blackberry Q5 already on sale in emerging countries and soon to be followed by an iPhone version.  And hopefully soon. Walmart prices for us too!

2. Using smart phones as they do in Africa – using apps such as M-Pesa - to buy food and goods without the need for cash, ATMs, local bank branches and—most importantly – NO CREDIT OR DEBIT CARDS that waste plastic and bloat our wallets. Smart phone instant bank transactions is now rapidly spreading like wildfire across Asia, with Barclay’s finally and tentatively introducing this African breakthrough to the U.K. as Pingit.

It’s anyone guess when North (and South) America will be allowed to catch up to Africa, as we are usually the last on the planet to implement banking changes.  If almost illiterate people in Kenya can buy a hot dog or its equivalent from a food vendor on a dusty road, both using their cheap smart phones to complete and verify the sale by text messaging – wirelessly and instantly sending the money through the banking cloud in the sky -- maybe highly educated Americans, the so-called world leaders in technology, will eventually catch up!

In this race, with billions of people doing transactions simultaneously, BlackBerry has the edge -- as its encryption is the world’s best and its messaging system the fastest and cheapest (as it uses the least broadband per call).

 

Corollaries:

Smart phone banking will have the following and easily predictable results:

1. Elimination of plastic credit cards and a halleluiah moment for environmentalists and anyone with a bulging wallet.  Without credit/debit cards galore, a greater surplus of the raw materials should lower the cost of other plastic goods, even panty hose.  Maybe even reduce demand and costs up the stream to crude oil prices.

2. Massive reduction in ‘debt charge’ interest rates as the billions lost to credit card theft and fraud is eliminated and the banks behind the system no longer need to jack up charges to more than 5% to 6% ‘interest’.

3. Say goodbye to stand alone and even bank branch ATMs.

4. Say goodbye to many local bank branches and most teller jobs – sorry, but these job losses are inevitable.

5. Say goodbye to U.S.-style small banks and small credit unions as the big guys will team up with the big service providers such as Verizon or Bell and buy up all available bandwidth in bulk.

    **** My prediction is only 5 banks will remain standing in the U.S. and probably only 2 in Canada.

6. The paper trail of receipts, credit card print outs in duplicate or triplicate, ATM receipts and teller paper slips will all disappear and go into text messaging ether. 

So expect, at last, the promised decline in paper use and manufacture that was promised some 3 decades ago with the invention of computers and floppy disks. Boy was that a joke for the last 30 years!  Tree huggers rejoice while paper manufacturers retrench.

So, in the end, banking will go through a gut retching downsizing and transformation not seen since the invention of paper money, while billions of people world over smile ear to ear as buying and selling gets easier and faster and with far less time and effort and hassle. The extra so-to-speak money in their so-to-speak pockets from reduced ‘charges’ and less wear and tear on shoe soles or car tires will make life a lot cheaper and free time more abundant.

All thanks to the invention of the smart phone and some bright people in Africa.