Mobile Banking Takeover – Episode 634

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[00:01] Welcome to the Prosperity Podcast. Prosperity thinkers, we’re going to be talking about the mobile banking revolution. This is where you’re not going to the bank anymore. Things are digital. We’re not going total dystopian, even though I want to go there. We’re not going to go there. That’s the area from the books that I like to read when I actually have the time for it. I’ll read that stuff. Let’s talk about reality, though. So when we talked about this pre podcast recording, you said, oh, yes, you got excited. And it’s because I actually was a banker right out of college. I worked for a physical location bank. And I remember when ATMs were new and we had to take people. I was on the loan officer side, but everybody was involved in helping with this.

[00:52] We had to take people out of the branch over to the wall and physically help them use the ATM because so many of them were afraid to put what in their head was a credit card. Right. It was a debit card at that point. But they had been given this thing called a debit card. These were brand new. This is late 80s, late 1980s. And we would take them out there, help them understand. You put the card in, you get cash out like it’s going to happen. It’s your account and it’s fine. And no, the machine is not going to spew dollar bills until the cows come home. Like it’s OK. And then you walk away and your account is safe. And we had to help them get over that hump. Well, the same was true, I’d like to say, about 10 years ago when the online banking thing started.

[01:37] But I know people today that are still uncomfortable with the idea of an online bank. I just came back from a conference where we got to hear from the head of ThreadBank, T-H-R-E-A-D. And you’re not going to hear this name because it’s involved in something that’s called embedded finance. And embedded finance is where a bank like Thread will support with actual accounts. These are FDIC insured into the millions. I forget the number, 2, 3, 10 million. I don’t remember what the number is anymore these days. And it does depend. They can combine accounts and whatnot. And sometimes they combine banks. But these are FDIC insured bank accounts like checking and savings accounts that are no different than what you would get at your local bank down the street or the nationwide bank down the street.

[02:30] And it is so important for us to understand that in most cases, and yes, there are exceptions. So you do want to be careful which mobile bank you choose to use. But in most cases, these banks are often as strong as or stronger than the other banks that we tend to know that we see as we’re driving down the road. And I believe that very quickly, I’m really frankly shocked it hasn’t happened more quickly, that those physical branches of banks that we see as you’re driving down the road are going to become obliterated in time. I mean, there’s just no point for them because everything is operating through our world in ones and zeros across the web, across the Internet, across the computer screens, you name it.

[03:19] And so most people, though again, I know that there are still people that are afraid of doing online banking. But most people do and a younger generation, of course, uses their phones to do it. This is going to become absolutely normal. We do still need to be careful. We need to make sure that our bank is FDIC insured. We need to make sure that it has some longevity. We need to make sure that they are not lending too much, a la, was it Silicon Valley Bank, I think, you know, of a year ago. And so ThreadBank, as an example, like I’ve seen their balance sheet, I’ve seen their leadership speak. I know what the bulk of their business is. And demand deposit accounts, that’s what a checking account is called, a DDA, demand deposit accounts, because you can demand it at any time, are the legs,

[04:12] the foundation of banking institutions. And of course, those include savings accounts as well. But then what is also part of the strength is the capability of borrow against payback. Now, it is important to know that banks have a reserve requirement from our government that is different than life insurance companies. Life insurance companies are required to reserve dollar for dollar. Banks are not. And so, again, you still need to be careful and, you know, do the research to be confident and possibly keep your money spread about at different places and that type of thing. Yet this mobile banking environment is so valuable and so helpful. And we can get so much good out of it when we come to it with the right mindset, do the research, make confident decisions and benefit from all of the good that is there.

[05:08] Yeah, absolutely. So here I’m going to push back in one area for our libertarian listeners, because what we’re dealing with and having mobile banking is great. If we go to other countries like in parts of Asia, parts of Europe, you can’t even use cash. So with only being able to go digital, be it an app, be it a cryptocurrency, be it whatever digitally, then control comes in. The other side is having banks and fewer locations, there’s less access to physical cash to be able to do the small transactions. So how do you suggest our listeners navigate that? Well, it’s, I think, coming the arena of no cash. You know, we stopped printing pennies recently, thank goodness, should have done that a long time ago.

[06:06] And I understand, you know, the desire sometimes to have things physical. I haven’t had cash in my hands in years. Now, I will say my husband carries cash, so, you know, the few times that we need it. I mean, just think about the transaction. We went to the airport yesterday and we would have liked to tip the porter $5 or whatever, but he didn’t have any cash and I didn’t have any cash. It would have been so much easier if we could have just tapped our phones and made it happen. And the sad thing is that the technology is there to actually let that happen. But, you know, I know there’s Apple Pay, like we’re getting there, right? But it’s not quite as seamless as it could be right now. And I think it’s interesting because our children watch us do this and they think they say things like, well, if you need information, call the phone.

[06:57] Like, you know, that’s where you get all your information. You call the phone. As young children that don’t totally understand mobile phones. Well, it’s no different, right? If you need something, money, ice cream, tap the phone, right? That’s how they think. They think it’s like stored in there and essentially it is. And so we will want to embrace this space. And if you’re afraid of it, then do your research. Take ThreadBank as an example and go in and do your research so that you can get confident about some of the institutions that are supporting this mobile banking environment. And then be careful. Like I’ve made mistakes too. I made some mistakes with Bitcoin early on where I got sucked into something that if I had set back and thought about it for two minutes, I would have known that it wasn’t feasible.

[07:53] But I put Bitcoin in a place that I shouldn’t have put Bitcoin and now it’s gone. So I get it. That happens. And you can keep it from happening if you’ll just step back, take a little time, do the research, think carefully and then also go with the long play in mind. Yeah, I like that. The argument that I also think of, because I started laughing when you said from the perspective of a child, like tap the phone, like the money’s in the phone, the money’s there. And I just started laughing because three, four, five year old actually believes that they’re like, oh, there it is. And it’s wild to think that. So for us, the most libertarian perspective that we can take, we can have, you know, you can go down the Peter Schiff, like stack gold or, you know, real estate and all of these things.

[08:47] And that’s great. We’re not saying that’s not good. But having a life insurance policy that you can then use and you can use that for the investments and the things that you’re doing valuable. And there’s one mechanism in there, which is it’s not something that you can tap and pay. So meaning you’re not going to impulsively screw yourself up. That’s what’s nice. This mobile banking, it’s one we’re seeing crypto investors held hostage because it can be easily acceptable, easily accessible. Whereas this life insurance, it’s not the case. Very true. I also heard a fun story recently where somebody did have their bank account hacked, but because the bulk of their cash was in a separate reservoir in a different bank.

[09:42] They were only inconvenienced by a couple thousand dollars. And of course, the bank where it happened is going to solve that problem, et cetera. But think about the difference between your mindset of, oh, my gosh, I could lose a couple grand, you know, numbers are relative for everybody. But instead of, oh, my gosh, I could lose twenty thousand dollars or whatever was in this person’s separate bank reservoir. So there’s lots of good that can be done by dividing out assets between the banks, plural, the life insurance companies, also plural. And then, yes, some of those things like crypto or real estate listeners. Thank you for coming in on this journey with us, figuring out the glimpse of the future and also staying true and holding on to the things that work and that have worked for generations and generations.

[10:35] Thank you for listening to the Prosperity Podcast. To take control of your money and have it work for you, visit ProsperityThinkers.com.