It’s fair to say that UK banking is undergoing a period of flux. Public trust in the sector remains low, a decade after the financial crisis brought banks to the point of collapse and recession, retrenchment and austerity in its wake.
In the intervening years new tech-savvy startups, sensing an opportunity, have emerged to challenge the might of traditional financial institutions. London is the global hub of a robust and rapidly growing fintech (Financial Technology) sector. KPMG calculates that investment in UK fintech hit a record £16bn in 2018.
Fintech businesses are taking on incumbents in a number of areas, from payment technology to small business loans to money transfers. In addition, a number of challenger banks have emerged to offer easy-to-use, online-only alternatives to traditional current and savings accounts.
These newcomers have no bricks and mortar branches, and instead rely on advanced technology, paper-free simplicity and easy functionality to attract customers. They are adept and agile, offering features like spending trackers and savings planners long before their more traditional rivals.
Protecting your savings
Most experts regard the emergence of a strong fintech sector as a positive step forward. Its presence has made financial services more responsive. But none of this activity fundamentally changes the nature of banking, which ties savings and investments to local, government-issued currencies (like pounds, dollars and euros). That in turn makes them vulnerable to economic fragility and political interference.
In other words, while the best fintech challenger banks provide a better customer experience, they don’t protect users from the next global credit crunch or financial crisis.
Put simply, banking that is tied to government-issued currencies cannot protect your money’s value. Put cash into a savings account with your bank and, when you come to spend it, you may find that it has significantly less purchasing power than it did when you deposited it, and in extreme circumstances, that you can’t even access part of your money. For that reason, some experts argue that, while challenger banks might be a step in the right direction, what the financial sector needs most of all is a challenger currency.
Money that adds up
Bitcoin is one example of that, but its wild fluctuations show that virtual currencies are not the answer to financial instability. A more promising example is a new mainstream currency called Tally. The difference between Tally and Dollars, Euros and Bitcoin is that each unit of Tally represents a real physical asset, which is 1 milligram of LBMA approved physical gold. In that sense Tally is money that uses a different rationale.
In many ways, Tally is a familiar fintech product. It is based on a user-friendly smartphone banking app. It takes just minutes to sign up for. It comes with a debit Tally Mastercard® that lets you spend your money seamlessly anywhere in the world, with no transaction or FX fees.
But in another way, Tally is something truly unique and potentially game-changing. Your money is no longer based on a banker’s promise, and subject to the slings and arrows of global politics and economics. It is the customer’s solid physical asset, housed in a secure vault in Switzerland, and utilised via their individual banking account.
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