One account to rule them all?

I was having a chat with some friends about the good old days, where everything was domestic and local. We had passbooks, cheques, cash and branches. Ah, those were the days. Life was simple, money was all in one place and easy to manage.

Then the ATM came about and so we moved to cards and card payments, and that was ok. Then we moved to call centres and online banking and mobile apps and all those things we grew up with – cheques, cash and branches – became irrelevant.

Then we also moved from local and domestic to international and cross-border to global and everyone, and all the things we grew up with (or I grew up with) became irrelevant.

What is interesting in this process is that we now have a myriad of options to make a payment, get credit or invest, and keeping track of those options has become very difficult, as blogged the other day.

That blog said moving money around has never been easier, but is a headache for governments. This time I’m thinking that moving money around has never been easier, but is a headache for the customer too.

The reason is that we now have too many choices and life is no simple because money is in too many places.

I don’t know about you, but my money sits in lots of places from deposit accounts to savings accounts to investment accounts to crypto accounts to pension pots and more. Each and every one of them has passwords and often 2FA (two-factor authentication) or maybe more – most of which are forgotten unless used often – and each and every one of them has become a pain in the ass to manage.

In fact, it amazes me the complexity of our financial system today when, back in the 1960s when the ATM was introduced, the inventor felt that people would not even remember a PIN (Ed: actually, it was his wife).

This is why open banking and aggregation services have a strong position. For example if, over a few years, you have ended up with ten or twenty or more providers of a financial service, how can you see it all in one place and access with one direction?

Right now, I don’t see the provider of such a service – if this is wrong, please advise.

Right now, it just seems that we are offering more and more choices, services, apps, abilities for users to diversify their financial flows and lose track of them.

In fact, it would not surprise me if, in a decade, millions of people have lost billions of dollars in investments they just forgot were there. We have already seen this in the pensions industry, where people forget where they placed their money.

According to the Association of British Insurers (ABI) over 2.8 million pension pots were considered lost between 2018 and 2022, an increase of 75%. The value of lost pension pots in the UK has risen by 37%, to reach a total of £26.6 billion, over the last four years. That’s a sizeable chunk of money.

Now add to this that a customer might have balances with a bank, savings with another bank, investments with an investment provider and, most importantly, funds on payment services like PayPal and others, and you might get the idea.

We live in a diversified and fragmented world of money. Someone needs to consolidate it all. The question is: who?