Cash is no longer king, says Martin Raymond, the founder of The Future Laboratory, and to avoid looking foolish we must look to millennials to learn how to pay digitally, he says.
It could be easy to dismiss "i-cash", the paying for services using Apple pay or similar apps, as just another millennial fad, but Raymond knows what he's talking about: as the head of one of the world's leading future consultancies, his job is to predict future trends that will affect businesses and consumer behaviour.
Yes, he literally predicts the future.
After studying what he calls the "Mobile-First Millennial" tribe with AIB, The Future Laboratory reports that younger people are increasingly moving towards methods of payment that are fluid, seamless and fast, leaving behind ATMs and cash in general.
While he acknowledges that many older people will resist this move initially, he predicts that cash will be abandoned in a decade and that people will need to turn to millennials to teach them how to use new technology in society.
When it comes to digital wallets, "It's like getting into a hot bath: we hop up and down a bit and then we finally settle into it", says Raymond. "The first time you see it, you're suspicious of it. The second time, you do it but you're slightly awkward doing it. The third time, you're kind of wondering why other people aren't paying this way as well."
We spoke to him about what the next step for finance is and how millennials play a role in pushing us forward.
Why are younger people paying with their phones more?
There's a couple of things. There's the straightforward generational issue, that each generation develops a favourite mechanism to pay. If you think about people in their 40s and 50s, the focus would be on credit and if you think about millennials, aged roughly 25-35, the focus is on seamless, fluid, easy payment and in this case, it happens to be paying through contactless or tap-to-go.
For one generation cash was security, while for millennials it's about mobility and being able to access cash on a 24-hour cycle.
"Our report says that people spend on average 5.6 hours a year at cash points and if you add that to queuing in a shop or coffee shop, you'll see a generation who sees that as wasting time."
When we were talking to millennials, they felt cash was less secure in that it made them more vulnerable. People are using the "cash cloud" more and have less of an attachment to phones than the older generation would to their wallets or purses. So they become what I call the "viral starters", the developers of a trend that the rest of us will be following over the next few years.
Is Dublin becoming more tech-savvy and open when it comes to facilitating that kind of technology?
If you go to places across Europe, especially in Scandinavia, you have about 70-80 per cent of transactions being done in a cashless environment. Ireland is around 20-25 per cent but pushing towards 30 per cent, and not only will it shift and exceed that over the next year, because our population is among the youngest in Europe and highest in terms of technological adoption, it will explode in a way that we're not expecting.
At the moment it's a question of visibility, you're not seeing enough people using it. But once you've got quite a high number of people adopting it, you'll see more using it in key environments like for coffee, lunches, going out in the evening. If you're out in the evening and you see one person paying this way, then other people adopt it. It's a bit like sneezing, everyone catches the cold.
You talk about "social norming", where the rest of the population follows the lead of a core, younger group and then copies them. Is there a problem in relying too much on following what younger people do?
I remember seeing my first ATM and having to wait and watch somebody else use it, or the first time people used mobile phones and they'd be shouting. Generally, the innovator who created the technology and the early adopter, the person who tries it out, are always the people we try to identify with or seek out. And generally, it's for good things, what I call learning "social etiquette". But sometimes it's also about looking at things we might be unsure about and we make a decision about whether we want to buy into it or not.
We look at the "diffusion of innovation", which is a curve measurable across all sectors. You have your innovator, the early adopter, the early majority, the late majority and laggard.
"Laggards are a fairly consistent group in the population who refuse to change. So there are people there to teach us and stop us looking foolish."
Recycling, organic, these were things that started out as quirky, potentially annoying things to us. Over time, we realise there's a good value in this and there's a positive side effect to social structures, to the planet and so on. Even the laggard now would say they're concerned about the environment in some way.
"Speed of spread" measures how quickly something catches on in the public, and I think once it hits 25-30 per cent it becomes inevitable [that it will stay]. The people become embarrassed that everyone is paying without cash and they're rooting around in their wallet to pull out some cash or find a credit card. So use the early adopters to make all the mistakes we'd make ourselves so we can have a good time and enjoy being out with friends.
When does a new technology become mainstream?
I think it's when it becomes not noticeable. If you think about ATM machines, you almost don't notice them anymore because you feel you don't need them. When we're not tethered to something that we have to think about, it just becomes part of our everyday cultures.
I recently had to explain what a telephone box was, and the more I explained how I had to walk around the corner to ring a friend, the more they looked at me in disbelief. They couldn't comprehend why I'd ever go to a telephone box. And the same thing in South Korea, some teenagers were talking about ATMs and they couldn't understand why you'd go to a fixed point to get cash.
I think it was Heidegger who said, "technology only becomes part of our lives when we cease to discover the nature of the technology". So contactless payment, it's not new but it still warrants some negotiation. This is the first stage of visibility. Stage two is when we see other people not using it and we think they're a bit curious, and stage three is when we don't even talk about it anymore. Ireland is stage one hitting stage two, whereas in Scandinavia it's stage three.
Are societal factors, like the last recession, at play in pushing millennials towards cashless payment?
If you're a teenager, your relationship with physical cash is pretty minimal. You see less of it, and younger people are making money using apps and software. Also, the social values that we attached to cash have changed, so when we take out a €50 note younger people find that kind of strange and probably see you as boasting in an annoying and arrogant manner.
So for them, cashless banking is much more collaborative, more conversational, more about having a certain equality among your friends where you can't see whether they've got 50 quid or 50c. Also as we move more across time zones and countries, these apps allow you to trade and pay and manage your financial affairs in a way that works regardless of the timezone, country, etc.
Second generation apps will be more like financial advisors. They'll be able to work out the best loan payments, the best offers, whether I'm running over my debit. Essentially, you'll have a very good financial advisor that's working only on your affairs and your lifestyle.
Are generations differing on this?
Someone in their 20s isn't as concerned about privacy as someone in their 50s would be. They're concerned about data usage whereas people in their 50s don't even think about it.
Innovators and early adopters are there to learn from, they're not there to dictate the patterns. However, none of us wants to look foolish and what they teach you is really good ways to avoid being socially awkward. In the next five years, the person paying with cash or credit or debit card will look socially awkward, like that mad uncle you see once a month. No one wants to be like the parents we hated.
The whole thing about the future is that it's not simple, it's not linear and it's like Dr Who - lots of time zones overlap. We should enjoy that, but also because they do overlap it allows us enough time to learn and take the good bits so we can get on and enjoy our lives.