Our Financial Future: How Banking and Money Will Change

No more paper money by 2043? From 3-D banking to digital currency, a look at commerce in the future.

Technology in the hands of businessmen
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In at least one Texas bank and one Ohio credit union, 3D video banking is currently undergoing testing, according to TheFinancialBrand.com, a website for bank and credit union marketing executives. Three-dimensional video banking is similar to a consumer video conference with a bank representative – only in this case, the executive looks like a living, breathing person sitting across from you. Thanks to theater surround sound, the representative also sounds as if they're in the same room. And since the consumer is interacting with a real person and not an automated hologram, the experience apparently isn't much different than the real thing.

Banking and managing money isn't what it used to be. The 1970s and 1980s brought us the rise of the ATM. Consumers became acquainted with online banking during the 1990s and the first decade of the 2000s. The 2010s are shaping up as the era of mobile banking.

That was underscored Sept. 10-11 in New York City when Mitek Systems Inc., a San Diego-based technology company, debuted its Mobile Photo Account Opening product at Finovate, a trade show where banking tech products are often unveiled. The product allows consumers to open a bank account within 60 seconds. If you have your bank's app, you can use your smartphone's camera to take a photo of the front and back of your driver's license, and presto, your new checking, savings or credit card account is open.

[See: 7 Hidden Smartphone Expenses.]

Here's a look at other financial products and services personal financial experts think we'll be using in the future.

Within 10 years. "The economic payments system will begin to 'know us,' either through biometrics, optical sensor or facial recognition," says Joshua Siegel, managing principal of StoneCastle Partners, a New York-based asset management firm that invests in banks.

That's already happening to some extent with smartphones – the new iPhone 5S, for example, uses fingerprint scanning to unlock the phone. Meanwhile, some financial services companies, such as Barclays, are testing and using voice recognition programs in customer service calls. (Why? It makes it much more difficult for a thief, who just stole your driver's license, to pose as you over the phone.) So it isn't a leap to believe that within a decade, the public will become accustomed to automated bank tellers and smartphones recognizing consumers by a touch or a glance.

And for all the talk about digital currency overtaking cash, ATMs won't be going away anytime soon. Diebold, Inc., a $3 billion software and technology firm in North Canton, Ohio, unveiled an ATM at the 2013 International Consumer Electronics Show that is designed to work with smartphones. You start the transaction from your smartphone, where you're then given a one-time code that you type onto the ATM, and your cash is released. As Diebold points out, there's no more worrying about someone looking over your shoulder as you type in your PIN number – and no possibility of a criminal capturing your debit card information with a skimmer.

[See: 10 Dangers of Mobile Banking.]

But not all banking changes will be of the gee-whiz-isn't-that-cool variety. "The banking industry will likely undergo significant changes over the next few decades," says Jeff Varisco, vice president of insurance services at American Equity Investment Life Insurance Company, headquartered in West Des Moines, Iowa. He believes that in industrialized nations, there will be more regulation focusing on solvency and the "too big to fail" problem.

Will we even notice? Varisco thinks so. "These efforts will cause the industry to move toward consolidation to a handful of large, national and international banking institutions thereby limiting the ability for banks to develop and offer products specific to regional and local needs," he says.

Within 20 years. At this point, nobody will use a teller for something as simple as a deposit or withdrawal, says Maclyn Clouse, professor of finance at the University of Denver's Daniels College of Business. "There will be no teller lines at banks, but loan requests and paperwork for the loans will still exist because of all the regulation. Banks may still have some face-to-face activity for investment products," Clouse says, adding that it will probably become as commonplace to do banking through a TV as it is now through a PC, tablet or phone.