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The world is moving towards digitalization, faster than ever because of the pandemic. Virtual money and plastic cards are turning the economy cashless, and their usage may continue to grow.
But what more is in store for it, and what will happen in the longer term?
The credit card and banking industry’s long-term future will be dominated by the impact of artificial intelligence, cryptocurrencies, and blockchain. Risk management, financial planning, marketing, and payment systems will evolve due to these technologies. The upcoming changes will fundamentally transform how we manage the inflow and outflow of value in our lives, geared towards the future meaning of financial products, currencies, and intermediaries. Issuers will no longer rely on credit reporting agencies' rating models only available in specific geographies. Instead, they will be willing to use thousands of different attributes like someone’s phone battery level to extend credit and yours and geolocation data to determine if a transaction is fraudulent or legitimate. Blockchain services will facilitate loan securitization with lower risk, lower transaction costs, and liquidity benefits. Financial planning will also change. We already see this with tools like Wealthfront and Betterment (product). They use artificial intelligence to search for commissions, collect tax losses, and carry on cash, offering personalized and relevant financial planning advice to people with more varied income levels than was ever possible with financial advisors.
AI will change marketing by predicting what we want to buy before we buy it, dynamically changing its price to maximize profits for the retailer, and programmatically advertising it at the most opportune moments of our life.
The timely suggestions of our augmented reality glasses and virtual assistants will become the new showcases and publications.
Payment systems will evolve, eventually overcoming government resistance and leveraging technologies to facilitate instant and seamless cross-border and peer-to-peer transfers between businesses and consumers and within each group.
One thing that will remain the same in all of these developments is that consumers will continue to demand the best interfaces and tools to manage their spending, savings, and payments and will expect more value in doing so. Consumers already know that in the rapidly changing age of AI, data is a new currency. They are also aware that their attention is a precious commodity, whether it’s scrolling through a social network or getting higher exchange fees from a retailer when using a rewards credit card.
Successful products, platforms, and companies will take advantage of these trends to deliver more value to customers. For example, Zero makes use of the high interchange fees that the vast majority of global merchants have contractually agreed to pay to card issuers as a prerequisite for accepting credit cards to deliver the best rewards to cardholders. Historically, large banks and credit card companies have required consumers to be tempted to borrow from a traditional credit card product to receive these high repayment premiums. Still, Zero is the first company to discontinue that part.
Zero is a banking substitute that combines a debit card’s simplicity with a credit card’s cashback. Its "Debit Style Experience" is a technology that allows customers to receive rewards from credit cards and get control of the debit card style.
You get a number to spend on the app, which increases when you deposit and decreases when you spend on the card. You don’t have to worry about manually paying an invoice, and new purchases are not allowed if they put you in red, for the first time, helping your bank as debit and earn as credit.