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The big 1-0

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[Dave Birch] Well, the tenth Digital Money Forum turned out to be a big, big success.  The feedback that we received was unbelievable: not only did we all get some new ideas and meet new people, but we had a lot of fun doing it, what with the guided tours of the historic Royal palace of the Tower of London and the Monopoly electronic banking charity tournament.  The presentations from the Forum are now available for downloading.

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The Forum, as it always has done, covered a wide range of topics though: it moved from history to social networks to banking to games as the delegates cast their nets wide to try and understand how retail electronic payments might evolve. Part of the enjoyment of Forum’s well-informed debates is, of course, looking across this landscape to try and determine which paths organisations should take and, just as importantly, when they should take them. One way to inform this process is to look back over the decade of Digital Money Forums to look for pointers, but in most cases it’s still hard to say whether the advances forecast previously have yet succeeded or failed except in some rather rare cases such as Simpay (which failed) and PayPal (which succeeded). As an illustration of the range of topics that have been covered at the Forum over the last ten years, note that very first Forum had presentations from Professor Glyn Davies (author of the definitive history of money) and from David Cronin at the Bank of Ireland paired with presentations on e-cash in GSM handsets and new internet payment mechanisms. For a more recent example, note that the eighth Forum featured presentations on virtual worlds and quantum cryptography. Virtual worlds subsequently moved very quickly into the mainstream and are now much discussed in the general business world, let alone the rather specialist world of digital money, whereas quantum cryptography isn’t yet at the topic of the business development priority list. Yet it is still impossible to say which of these topics will have the biggest impact on business in the longer term!

The central question posed this year was that of the “half life” of cash, presupposing an asymptotic fall in cash usage. Will digital money become the mainstream in the next decade? For this to happen, I might suggest, we would need to see the use of physical cash in retail transactions fall below 50% by volume (it has been below 50% by value for a couple of years now in the UK) and the use of alternative payment mechanisms account for more than 50% of online payments. It could well be that the drivers necessary for this to happen are already in place, and they are not all about technology.  The social cost of cash is quite high — something in the region of half-a-percent of European GDP — and it cannot be maintained at this level indefinitely.  Therefore something will happen, most likely the substitution of debit cards and, in the not-too-distant future, mobile phones for cash in day-to-day transactions.  Does this mean the cash will disappear?  Probably not, although it may become rather unfashionable.  Doug West pointed us at a quote from Mark Garvin of JP Morgan Chase about the use of cash a decade from now becoming a rarity.  I think I’d concur: after all, there are some people today who still bake their own bread, listen to vinyl records and knit their own clothes.  But they’re not the mainstream.

The nice people at Finextra covered the Forum and you can see an interview with me that they filmed after the event.

These opinions are my own (I think) and presented solely in my capacity as an interested member of the general public [posted with ecto]

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