THE FUTURE OF MONEY Bernard A. Lietaer - library.uniteddiversity ...

Why should we expect that one of the most conspicuous legacies of
the Industrial Age our national currencies would remain impervious
to change? Even bankers, such as Citibank's CEO John Reed, agree
that 'banking will become a bit of application software on an
intelligent network'. The 1998 merger between Citibank and
Travellers Insurance proves that he means it. Similarly, the
integration of frequent-flyer-miles incentives with traditional
national currency-based credit cards shows the trend towards the
future. In fact 40% of Frequent-flyer miles are now not earned by
flying; and two-thirds of British Airways' air miles are cashed in for
something other than flights.
Implications for banks and financial services
From the 1980s onwards, banks found that they were forced to
move into new arenas of businesses, performing totally different
functions and facing different competitors. Instead of making money
from the spread between customers' Savings deposits and loans to
businesses, banks are now in 'financial services'. Their biggest profit
centres are likely to be credit cards, foreign exchange, derivative
trading, securization, specialised insurance products or other exotic
'financial products' designed for sale to individuals and businesses.
As the Internet expands, it brings with it a second wave of
computerisation including Open Financial Services. 'Open Finance' is
defined by Forrester Research as 'emerging affluent consumers
enjoying best-of-breed financial services combined with easy
electronic movement of money. Open Finance means using
technology to extend premium financial services that the wealthy
enjoy to the mainstream investing public.' This opens up a whole
series of new issues for everybody, including tax authorities (see
sidebar).