Digital Technology
by John Lewis
Block Street Journal
You are awakened by the soft soothing sounds of your favorite compact disc playing. Your computer has activated your coffee pot, set your home temperature to the correct setting and started your breakfast. Soon, the flat screen television/computer monitor comes on to bring you the latest news from around the world – news that you have personalized to your tastes and interests.
During the night, while you were asleep, it has gathered all the latest news, weather and sports, downloaded it to your computer with text, video and pictures. You will decide the length and content of the "morning show" that will be automatic. Then, all of your personal financial information will be highlighted; household bills, investments and a summary of your current balance sheet and income/expense statement. It will ask if you want to deduct your electric bill - or any others that have electronically been presented for payment during the night-from your money market or other account.
You then might want to review all of your current expenses compared to budget income to anticipated budget and review tips for better control of your finances. It might recommend that you reconsider your global investment in a particular country that, during the night, had experienced political or economic upheaval, consequently making your investment more speculative or maybe violating one of you investment objectives that your computer tracks for you. It might recommend that you consider an alternative investment that could save on taxes because, while you were asleep, Congress passed a new tax bill and the president may sign it into law today. Next, perhaps, personal investments are reviewed. Any maturities of certificates of deposits or bonds, are noted and alternative investments are recommended for your approval.
Electronic Shopping
Next, it could inform you of the sales on items available via the Internet or from local stores and match it to your interest or size or need. The shoes from Italy or shirt from Singapore could be paid for with cybercash from your local bank account, and transferred instantaneously - your product will be received within two days.
Book reviews, music reviews, Broadway or television reviews then follow; the order of the presentation is selected by you. You could scan your calendar for day/week/month. Then lie in bed and accomplish some of your job activities before you go to work, or perhaps all of them, so you don't have to go to the office unless you wish. Next will come an outline of your personal objectives. The program will inform you that to keep your New Year's resolution on health and fitness you need to do this or that series of exercises and alter your diet. Your program could then tell you your car need servicing, grass needs mowing, and the yard needs watering.
It might then start your car and tell you to get out of the house ...after it has replenished your smart card in your wallet or purse with enough funds to shop or play for the day. The funds will be transferred from your bank account onto a card with an electronic chip that records deposits and purchases on it, later downloading to your records or audit reasons.
This scenario is technologically feasible today or tomorrow. The question is, do you want this? It is a very personal question. Some may, some may not. Some might consider this is an intrusion they do not want in their lives, others view it as another useful tool for greater productivity, peace of mind or help achieving more personal time for pursuits they enjoy more. It's not that the computer and its programs control us, it is that they will allow us to control ourselves more effectively. Control our time and our money.
Digital Banking
Electronic banking and finance can give people more control of their finances, help them make better decisions, and make their time more productive resulting in more available disposable funds and more disposable time. The theory is that this creates value for humans, and value equals time, money and control of their lives. Value is the right information at the right time and the ability to act on that information in a timely manner.
The banking industry, the Federal Reserve System and the United States Government have constructed a complex, sophisticated way to clear all checks and electronic funds. This is commonly known as the "payment system." It clears billions of dollars from all over the US and the world every night. Its effectiveness can best be demonstrated by the fact that most people do not even know it exists. The payment system is the final payment for all debts and bills, personal and private, This is legal tender for all payments, just as currency is legal tender, which you can see written on the face of all United States currency.
Digital Money
Cyber cash, digicash, smart cards, and other innovative ways to transfer money are technologically feasible today. Their success awaits the consumer's acceptance. There are many companies offering these new products - banks and non-banks - and many more on the drawing board. As it should be, you have the final say in the success or failure of any new product. Sometimes the more technologically advanced, so called "superior," products do not gain consumer acceptance, such as the Betamax video over the VHS.
As with any new sophisticated product, there will be many new offerings, few successes, and many notable failures. The telephone calling cards are the most recent example, Great convenience to the caller, no standards of issuance by the companies. The result was loss of investment by the unaware purchasers of some of the calling.
Transfer Systems
The bank and the banking industry are viewing the development of these new technologically-based transfer systems with great fear, for us and the consumer. We view the "payment system" as ours and as our great asset. We have a huge investment in it and it works. In our opinion, any funds transfer systems that do not clear through the "payment system" have serious drawbacks, serious faults. The consumer could eventually pay for these because of default of the issuer, inability to effectuate final clearing or it could be held to not be "1ega1 tender." The lawyers would love this - pay for something and that payment not be considered final settlement of the debt because of currency fluctuations or the market discounting the value of the company issuing the card. Global payments such as buying something on the Internet could be totally disrupted for these reasons. These reasons are historical and valid. In Europe, the issuance of third-party transfer cards is controlled by the central banks or the governments.
ABA Task Force
The American Bankers Association task force on the Payment Systems, of which I was one of ten members, after careful, lengthy and informed discussion, has made the recommendation that any new financial transfer system be required to clear through the current payment system, as do all credit cards now. We also were quick to conclude that we did not want to impede the flow of innovative new products and opportunities for added convenience for the consumers. Thus, our challenge is to be sensitive to the needs of our customers and innovative in new product design. this will allow our customers access to this new way of shopping, whether it is worldwide or in our communities.
BOF Website
The Bank of Fayetteville has had a World Wide Web Site for several years; it has evolved into not only an informational site, but now you can apply for loans. The next steps, which will be coming soon are account inquiry and funds transfer. In the meantime, the bank has analyzed many electronic transaction banking software programs. Many are current and state of the art, but none have achieved all of the objectives that we have set before we offer them to our customers. The current shortfalls of the systems we reviewed are: dependability, compatibility with current systems, integration into existing banking software but more importantly ease of use by our customers. The next generations chip, the next piece of software, the next interface with mainframes, one or all of the above will accelerate the developing of a critical mass necessary to make home electronic banking the next hot service. We will offer this when we are comfortable with all of the aspects and implications that it entails.