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Ecuador News

Silicon Valley tech consultant predicts success for Ecuador’s ‘digital wallet’, death for banks

Futurist and technology expert Stephen Brobst says that the financial services industry is undergoing a transformation and that smaller countries, such as Ecuador, could see big benefits.

Stephen Brobst

Brobst, who heads a data analysis firm in Silicon Valley, California, believes that much of the current banking system will disappear within two decades. “With the internet, the banks become less relevant and will eventually become unnecessary,” he says. “Even today, they serve primarily as intermediary, clearing house services and remain relatively strong only because of the banking laws that protect them.”

He is in Ecuador to advise companies on emerging technology trends.

So far, Brobst says he likes what he sees of Ecuador new “digital money” system, or “electronic wallet,” that goes into effect in April. The system replaces a government-run program established during the Rafael Correa presidency that failed to attract public support. “The government should not be in this business since it stifles creativity and imposes unneeded controls,” he says. Although Ecuador’s system will be administered at first by banks, Brobst believes it will eventually operate on its own.

“In countries like Ecuador, there is a great need for alternatives to the traditional banking system,” he says. “I just visited a Waorani community in the Amazon and the people there have difficulty getting their hands on dollars in small denominations, such as $5 and $10. No bank is going to open a branch out there but if the residents have internet and smart phones, they don’t need a bank. Digitalization is a form of financial democracy.”

Brobst, who served on President Barack Obama’s Council of Advisers in Science and Technology, advises businesses to focus on improving their data bases and to use digital information to improve customer service. “The businesses that understand the importance of this will prosper, those that ignore it will disappear,” he says.

  • baba free

    Yeah, of course, if Bitcoin can be hacked, what makes you think that the ‘digital wallet’ can’t be hacked? Governments hate cash because it’s so hard to control and tax…

    • Dan

      Same problem banks have today. Any online service has to deal with it. It’s certainly not an argument against progress although the banks and Luddites will use it.

  • Darrell dullnig

    If tribes like the Waorani are smart, they will begin now to build a barrier to protect themselves from the advice of technology experts (or any other types of experts)from a society in a condition of ruin.

  • Kevin Lichtman

    The Waorani have shit for Internet. The Internet in Quito is unreliable. I know the Amazon, well. Often times you go days without power. Add to that Ecuador is a “cash” economy where credit and debit cards are not acccepted by 90% of all businesses and that evading taxes through cash transactions is a sport second only to Olympic alcohol binging, then I think you have about a 1:5,000,000 chance of this stupid plan succeeding.

  • Scott Gibson

    I confess the ‘banks will disappear’ nonsense mystifies me. It’s possible there will be fewer physical branches, but someone will be behind the digital wallet on your phone, and it won’t be some friendly venture capitalists who just want to help you. It will be a bank; but hopefully not one freed of the terrible, stifling yoke of banking regulations.

    • Keith B

      Banks are mostly run by computers these days. What’s left of the “human touch” is almost gone, sad to say. Even the decisions are made by computers. Like the guy says, they’re just clearing houses for digital money.

      • Scott Gibson

        Wells Fargo has 270,000 employees. Bank of America has 210,000. I’m not sure what ‘banks are mostly run by computers’ means. In any event, crypto currencies aren’t going to replace sovereign currencies or banks. Banks may well use digital currencies, but those currencies will be called ‘dollars’ or ‘euros’, etc, and be sovereign currencies.