Brett King: Mobile banking revolution will do away with cash

Following this came phone banking, interactive voice response systems, the advent of the internet, increasingly complex customer database mining, and remote distribution channels.

The most disruptive force in banking today is changing customer behaviour – behaviour that is increasingly enabled by new technologies. This is extremely disruptive for bankers; in fact, these disruptive forces are speeding up.

The first phase in this behavioural shift occurred with the arrival of the internet. While many banks denied it at the time of the dot com bubble, the internet changed forever the way we, as customers, accessed our bank account and our money.

The internet gave us control and choice that was not available previously.

As internet banking capability has improved, the drive to visit the branch has also started to diminish, and the majority of customers now rely on internet as their primary access point with the bank for day-to-day transactions.

Within 10 short years, we'd gone from 50-60 per cent of transactions done either over the counter at the branch, through ATMs or cash and cheques, to 90 per cent of transactions conducted through the internet, call centre and ATM. This was a big change in itself.

The second phase is occurring right now. The emergence of the

smartphone or so-called "App Phone", such as the iPhone and Google Android-enabled phones, is a driver for portable or mobile banking. The iPad has further accelerated this change.

Because as we're on the move we've learned that we can do a bunch of stuff through our mobile device, and it is just so convenient. We can book movie tickets, book airlines and hotels, order pizza; we can do everything we can do on an ATM on our phone – just not withdraw cash.

The BlackBerry started this trend, showing us that we could communicate with email and SMS on the move really simply. Then, with the App Phone, we've learned we can do fun stuff like read books, play games, check-in, locate the nearest underground, Starbucks, Indian restaurant – we are confronted with an increasingly rich content and user experience through the handset. So, mobile is a big part of our future.

Some bankers yearn for a return to simpler days. Recently, Lord Levene has announced his "Project New Bank", which promises a return to the days when your bank manager knew your name, and you'd be treated with courtesy and grace, instead of feeling like a number.

Thus, we observe banks like Metro Bank marketing themselves on their differentiation in opening hours (seven days a week, open late) and the fact that they know your dog's name. Virgin is doing something similar.

When bankers look at the possible locations of a branch for a bank,

what do they look for? Primarily, the key concern is being able to maximize people through the door – so the branch must be in the most convenient location for customers. The problem is that we aren't visiting branches as much as we used to.

So, if you didn't need physical cash, what would happen then?

This is the third phase, when we move to mobile payments on a broad scale. Contactless payments, mobile wallets and stored value card micropayments are already here, but more is to come.

The third phase also involves the convergence of your mobile phone and your credit/debit card, which is a logical technical step in the next five years.

When you can use your mobile phone to pay at the point-of-sale, when you can lend your friend 50 or pay the plumber just by touching your phones together, or you can send cash to your children by punching some numbers into your phone – what happens to our need for cash? What happens to cheques?

This third stage might sound a bit like science fiction, but the reality is we can actually do all of this today using technology like Barclay's latest contactless credit card, or through PayPal on our iPhone.

It is why the UK Payments Council has said cheques will no longer be supported beyond 2018. It's why Apple and Google are investing heavily in mobile. It's just a matter of time – but in the meantime, the gap between our expectations of the bank and their ability to meet our needs is widening.

It's time for banks to think differently about engaging customers, and not just in branches.

Brett King is a financial advisor, author of BANK 2.0, How Customer Behaviour Will Change the Future of Financial Services, published by Marshall Cavendish, price 19.99.