Are we living in a post bank world?

Genuine question - who uses banks these days? When I look at myself and my spending patterns I would have to say that the only reason I use a bank today is because of sheer laziness. While we have a few bank accounts, they are used solely to have cash to pay for daily living expenses along with the access to credit cards. The only time I ever seem to go into a bank these days is when I need to get cash, either Canadian dollars or some other currency, but otherwise I have no need for them. Moreover, for the services I do get, I pay an awful lot for them.

Meanwhile, when one looks at other options out there, there are plenty. Wealthsimple is a virtual platform that is backed by Power Financial and its subsidiaries, as well as other investors. Over the past ten years the platform has grown to the point that it now manages over $70 billion in assets, a truly mind blowing figure, and the asset grab that they are doing seems to be accelerating as they were “just” $50 billion a year ago. Sure, this may be small potatoes when compared to the likes of RBC ($1.4 trillion) but they also had 161 years to get there.

I opened an account a little over a year ago at Wealthsimple to try and understand how it worked, and I will say that I was blown away with just how simple the process was. Moreover, beyond the fact that there were no costs for my activities, I was actually getting rewarded for being a customer, whether through bonuses being paid for transferring assets or getting a decent amount paid on cash balances, versus my “premium saving” account at the bank where I got a paltry 0.5%. For giggles I looked at the mortgage approval process and it was simple, fast and appeared to be just as competitive. Credit card? It took me two minutes to get it done. And they keep adding more and more offerings.

As I look ahead, I think that I am in the last generation, Gen X, that has any real personal exposure to banks. When I look at my kids, everything they do is electronic, and they all look at costs through a microscope. Banks will continue to serve a purpose when it comes to things like business lending, as there are a lot of complexities and due diligence that needs to be undertaken. But for the masses, I truly question whether we are beginning to see the end of days of banking as we know it. With the Big 4 banks there are 350,000 employees and a ton of physical assets scattered across the country and around the world. I have to wonder when (not if) we start to see real cracks in the foundations of those traditional businesses as I think the newcomers are here to stay. With companies like Wealthsimple and Neo Financial, it feels like the initial scratchings are appearing on the wall.