Predicting the future

Monday was the UK bank holiday, so some of us just came back to work after a long weekend. Many across the country used the extra time to do a bit of spring cleaning. I also found myself rummaging through some old materials and came across an interesting paper on how financial markets might look in 2020. Let me share a few quotes:

• "The basic financial functions [...] will not change, although how we perform these functions will change."
• "By 2020, a true global marketplace will be established, with everyone - individuals, companies, investors, organizations and governments - linked through telephone lines, cables and radio-wave technology. With the touch of a button, people will have access to other individuals and vast databases around the world. Such access will be readily available through phones, interactive television, workstations or hand-held "personal digital assistants" that combine all these functions. [...] There will be no special need for retail financial branches because everyone will have direct access to his or her financial suppliers through interactive TV and personal digital assistants. [...] True "global banking" will have arrived, as every household will be a 'branch.'"
• "A key feature of 2020 is that nearly everything could be tailored to a client's needs or wishes at a reasonable price, including highly personalized service from financial companies. Firms will be selling to market segments of one."
• "Supplying financial assistance will be a free-for-all. It will not be limited to those calling themselves "financial institutions" [...] That means an organization that specializes in financial matters may at times find itself competing directly with its clients."
• "The progress is geometric because each element - computation, availability of data, communications and algorithms - feeds on the others."

If you attended any recent conferences on digital banking, this will sound very familiar - just replace "personal digital assistants" with "smartphones." However, these quotes are not from a recent conference presentation. They are from a paper given by Charles S. Sanford, Jr., serving as the Chairman of Bankers Trust at the time, at the Kansas City Fed's economic symposium. The date? August 20, 1993... Many of these predictions ring true, although we are not quite there yet, 22 years after the paper has been delivered with only five more left to go. Why? The clues might also be in the paper:

• "Human nature will not change. [...] A very basic element of that nature is a hunger for security - law and order, job security, retirement security, decent and affordable health care and financial security."
• "Dishonesty will be around in 2020 as it is today. Voice recognition, DNA fingerprinting and secure data encryption will instantly verify transactions, preventing today's scams. But new forms of "information crime" will appear."
• "Technology will never replace the subtlety of the human mind. People will be the most important factor in 2020, just as they are now. We must learn how to grow wise leaders from the ranks of specialists, a difficult task."

As humans we also bring the baggage of unpredictability, irrational behaviour and desire for comfort and the familiar. We should bear this in mind next time as we contemplate how technology is changing our lives and what the future might bring. P.S. The entire paper is available here.