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.
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.