Barefoot Investor: Tech titans take on banks in the fight for your wallet

Facebook plans to launch its own cryptocurrency next year and now “big tech” is now coming for your wallet. Our banks know they have one almighty battle on their hands, so who will win, asks the Barefoot Investor.

Tech giants are going head to head with the big banks for our wallets. Picture: Wall Street Journal

Facebook plans to launch its own cryptocurrency next year, the BBC reported this week.

(The article referred to the new currency as “GlobalCoin” … though I much prefer “Zuckbucks”.)

So, will this be yet another crazy crypto coin?

Not a chance!

My bet is that “Zuckbucks” will be as boring as your Aunt Betty’s status updates.

See, Facebook is already lame (but incredibly lucrative), so it’s doubling down on something even lamer (and equally lucrative): payments.

And that’s because Facebook’s endgame is to become the WeChat of the West.

Hang on … what’s WeChat?

It’s the Chinese version of Facebook, Instagram, Twitter, YouTube and Google. All rolled into one super app.

However, WeChat’s big dumpling is mobile payments. In China you can order a meal, split the bill with your mates, pay your share, and take a photo of your dish to impress your friends — all on WeChat.

This immersive experience throws off a lot of personal data, and that is what Facebook really wants. Oh, and so does Google. And Apple. And Amazon. And thousands of tech companies that you and I have never heard of (yet).

Now think about your current humble little bank account.

Yes, you’ve got an app on your phone … but it still looks and feels pretty much the same as it did 20 years ago, right?

It’s all still BSBs and account numbers, and plastic cards you carry around with long numbers printed on them.

Well, “big tech” is coming for your wallet … and our banks know they have one almighty battle on their hands.

It really began a few years ago when Apple Pay arrived with the promise of ditching your silly plastic card and allowing you to make payments with your iPhone (in return for Apple sharing a clip of the transaction).

“Bugger off!” said the big banks.

The only problem was their customers wanted Apple Pay.

And so, one by one, they’ve each folded like a cheap card table: first ANZ, then the CBA (which announced last week it would spend $5 billion updating its technology to fend off tech competitors), and this week NAB.

And that leaves Westpac, which is gallantly continuing to produce its own “Apple lite” white trash wearables, which it calls “Centsitive Objects”. (Geddit?)

Yet my all-time favourite banking bling is the Bankwest payment ring. No jokes. It’s really a thing (and yours for just $39!).

Here’s how Bankwest describes it: “Our award-winning payment ring is as easy as tap & go — just grab the things you need, fist-bump the terminal and you’re done.”

(Yes, they really said that.)

This week Morgan Stanley estimated that the rapid take-up of smart wallets (payments on your phone) could cost Aussie banks $22 billion in lost revenue as the tech titans move in.

Fist bump to that!

Tread Your Own Path!

Combining finances raises many questions.

Q&AS

I’M NOT READY TO SHARE EVERYTHING ... YET

ASHLEY ASKS: I am 26 and recently got married (yay!), but my husband and I are not sure how to combine our finances.

He owns a house with his brother, and I have a decent inheritance which I would not like to lose if we ended up divorcing (yes, I know it’s a bit early for that!).

I thought of leaving the inheritance in the offset account, but if my husband dies I do not want to lose it to my brother-in-law either!

How can we make it all work? Do we need a (post) prenup?

BAREFOOT REPLIES: It sounds a little like you want a Meatloaf marriage: “I would do anything for love, but I won’t do that (share my inheritance).”

The way I see it, there are three things you can do: First, you can go to a lawyer and draw up a “binding financial agreement”.

This will set out who gets what if you want out of the marriage like a bat out of hell (another Meatloaf reference … ask your parents).

The downside to binding financial agreements is that they can be expensive, and they’re often contested.

Second, a more practical approach could be for both of you to write single wills which state that your parents (or whoever) get your stuff in the event of your death.

These wills can be updated as you go through life.

Third, if you want to avoid a lot of financial heartache in the future (and also avoid the costs associated with the first two options), I’d seriously consider talking about your feelings to someone qualified —‒ and that’s not me!

Fact is, you’re still in the honeymoon phase of your marriage (which, in my personal experience, lasts until the first kid pops out) yet you’re already choosing money over marriage.

That doesn’t make you a bad person, and it’s nothing to be ashamed of. It just means you have doubts.

And those doubts won’t go away.

 

Having financial security keeps all of us on the straight and narrow.

TWISTS ON LONG ROAD TO THE STRAIGHT AND NARROW

PETER ASKS: I am 59 and I have four years left to serve on a five-year prison term.

As a prisoner I do not have a phone or the internet, so writing this letter is the only way I can contact you.

I have spent most of my life in institutions, from boys’ homes to jails.

I have only got a very low level of education — I think I may have finished Grade 6 (I am not sure). I need a lot of help with my reading and writing as well as my spelling. Yet recently I read your book and was able to understand most of it.

Now I am hoping you could help me.

I have come into some money (just over six figures) which I want to invest while I am doing time, but I am having problems with my bank, NAB.

They will not allow me to do electronic transfers from one bank to another while I am in jail. Yet I am afraid to close the account because if they send me a bank cheque it could go missing (that is not unusual for prisoner property).

I do not have any family or friends outside prison who can help me, either.

I would love to invest at least $90,000 for the next four years before I get out of jail.

My goal is to have enough money to buy my own home before I die, with no debt and maybe some savings.

After all, isn’t that every man’s dream? Please help me and write back.

BAREFOOT REPLIES: Good on you for learning about how to manage your money.

Having financial security is one factor that will help you stay on the straight and narrow when you get out (and I’ve donated many copies of my book to prisons across the country for this very reason).

Now, I spoke to NAB on your behalf, and they’ve suggested that you write a letter to NAB’s special service. The address is:

NAB Resolve

Reply Paid 2870

Melbourne, Victoria 8060

I’d suggest you transfer your money into a term deposit and time it to mature when you get out, and in the meantime spend the next four years mastering an employable skill.

Good luck!

KEEP DEMANDING REFUNDS

FIONA WRITES: I just wanted to say thank you!

I received a letter from Westpac today to say that in response to my “query” they have cancelled my credit card repayment insurance and refunded $1100 in premiums paid over the past four years. Woo-hoo!

One giant leap towards paying off and cancelling my card altogether!

BAREFOOT REPLIES: Ka-ching!

Since I wrote my column a few weeks ago, I’ve had heaps of Barefooters tell me they’ve got thousands of dollars back.

And if you, dear reader, have been sold junk add-on insurance, go to demandarefund.com and stake your claim.

MORE BAREFOOT INVESTOR

If you have a burning money question, go to barefootinvestor.com and #askbarefoot.

The Barefoot Investor holds an Australian Financial Services Licence (302081). This is general advice only. It should not replace individual, independent, personal financial advice.

The Barefoot Investor for Families: The Only Kids’ Money Guide You’ll Ever Need (Harper Collins) RRP $29.95

Originally published as Barefoot Investor: Tech titans take on banks in the fight for your wallet