If Decentralization is the wave of the future, and indeed gives considerable evidence of moving in that direction today, why is centralization still continuing to make inroads? Case in point, “disappearing ATMs”.
It’s all part of a broad trend. Bank branches are increasingly becoming so-called “customer advisory points,” where the primary role of branch staff is to sell customers a myriad financial products, many of them costly and/or risky, while curtailing the cash services they offer customers…
The accelerating disappearance of ATMs follows an unprecedented wave of branch closures as banks abandon towns and villages where they can’t make a large enough profit. But this is not just about saving money; it’s about trying to force a dramatic change in customer habits. The more difficult banks make it for their customers to use cash, the more likely those customers are to turn to alternatives, such as contactless cards and mobile money platforms.(wolfstreet.com)
Pushing customers to go cashless and place increasing trust on their emotionally, professionally and geographically-distant banker might not be so bad if the financial institutions themselves gave evidence of improving their service game. But all too often this has not been the case. What is now being called “the biggest IT disaster in British Banking History” took place in late July.
Banco Sabadell, Spain’s version of the Keystone Cops?
In late July, Banco Sabadell, the parent company of TSB, the UK’s seventh largest bank, decided to save a few million euros in monthly fees by quickly migrating its record-keeping from the latter’s old IT system to its own in-house version, in the process skipping “application of a rigorous set of go-live criteria to prove production readiness.” Result? Data migration started before the current backup had been completed, and a router failure in Spain led to lost and scrambled customer data affecting hundreds of thousands of customers. Lost payrolls, mortgage installments and an inability to access bank accounts were the result.
The bank, in a manner reminiscent of an early 20th century parody of the Keystone Cops, compounded the error by apologizing to the wrong customers. Thus, the desire to save a few million euros, may now end up costing the bank well over $1 billion.
Just the month before, millions of consumers in the UK and parts of Europe were unable to use their Visa cards at point of sale for over 12 hours. As Don Quijones on wolfstreet.com noted, “While the mayhem caused by the outage may have been short lived, it served as a stark reminder of the risks, both for consumers and retailers, of depending purely on cashless payments. In the UK, the chaos unleashed was particularly acute since it is one of the world’s most cashless economies, pipped to the post only by Canada and Sweden” (at 57% and 59% of transactions respectively).
Centralized data processing – financial and otherwise – has become the 800 pound gorilla in the centralization-decentralization debate. How is this all going to play out? George Gilder, has over four decades, written a series of prescient works profiling momentous sea changes that most mortals were unable to see coming. In his most recent book, Life after Google, he tackles how, as a member of an increasingly-feared oligopoly (including Amazon, Facebook, and Apple), Google will arrive at a point which is ultimately its undoing. If his premise is correct, the result may end up being just one, albeit transformative aspect of an across-the-board realignment from a centralized to a decentralized environment. Gilder writes:
If the path to knowledge is the infinitely fast processing of all data, if the mind – that engine by which we pursue the truth of things – is simply a logic machine, then the combination of algorithm and data can produce on and only one result. Such a vision is not only deterministic but ultimately dictatorial.
If there is a moral imperative to pursue the truth, and the truth can be found only by the centralized processing of all the data in the world, then all the data in the world must, by the moral order implied, be gathered into one fold with one shepherd. Google may talk about privacy, but private data are the mortal enemy of its system of the world….Google will likely be an important company ten years from now. Search is a valuable service and search it will continue to provide. But Google’s insidious system of the world will be swept away…
Marxism was historically hyperbolic the first time round, and the new Marxism is delusional today. It is time for a new information architecture for a globally distributed economy. Fortunately, it is on the way.
What happens when people are backed into a corner – while the powers that be push on a string?
Banks and other financial institutions, having shown themselves to be less than fastidious when it comes to reliably carrying out their business responsibilities and service to the customer, nevertheless feel compelled to keep forcing their preferred operational procedures onto the public at large. Indeed, the term internet security itself seems to have become an oxymoron as the compromise – indeed theft of data from businesses, government agencies and medical databases continues unabated.
So, as either cash, financial privacy, choice, or even the ability to decide if one wants to spend their money at all disappears, something’s got to give. There’s certainly precedent for change. As Caitlin Long, Founder of the Wyoming Blockchain Coalition succinctly states it, “Money historically has been supplanted by new versions of money when technology innovations come in and necessitate the movement toward new forms of money.”
Could a blockchain-operating cryptographic monetary system backed by silver, history’s finest fiat money killer offer a way out, while advancing decentralization in direct proportion to its effect on marginalizing the current ruling centralization ethos?