ABN AMRO cuts interest rates by half, cryptocurrency such as bitcoin ends banks earnings model

The NOS wrote today that the ABN Amro is the first Dutch bank to lower savings interest rates again, to just under 0 percent. The interest rate will be 0.01 percent from 1 November.

Contents hide

1 Is saving at the bank still a good idea?

2 Cryptocurrencies offer a way out

3 Do not look at today, but at the potential

4 Everything will be different within ten years

5 Models to put banks offside

6 Future is coming

7 Related posts:

Is saving at the bank still a good idea?

This means that if you put 10,000 euros in an account for a year, you will only receive 1 euro interest in return. You can ask yourself whether putting your money in a savings account is still the right choice. Certainly if the Central Planning Bureau has calculated that inflation will be 2.6 percent this year.

The reduction takes effect on November 1 and applies to all popular savings at the bank.

Cryptocurrencies offer a way out

Darrel Duffie, a professor at the Stanford Graduate School of Business says that cryptocurrencies will put an end to the benefits that banks currently enjoy from deposits with such low interest rates.

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He expects cryptocurrency’s to turn banks’ earnings models completely upside down within ten years. And this is inevitable.

Do not look at today, but at the potential

Professor Duffie looks at the long term and warns that you should not pay decentralized cryptocurrencys such as bitcoin for the degree of adoption today. He also says that all the negative feedback that Facebook receives with Libra does not mean the end of private cryptocurrencys.

“The future is coming, and that future is disruptive for traditional banks that do not adjust in time”

Everything will be different within ten years

Whether in the form of bitcoin, a dollar-backed stablecoin, a Facebook product or a digital currency from the central bank, the benefits of the digital asset model are likely to mean that banks will no longer have access to low interest rates within ten years deposits:

“New payment methods will lead to more competition. If consumers have faster ways to pay their bills, and sellers can get faster access to their sales revenue without needing a bank, they don’t want to keep so much money in accounts that you hardly get any interest on. “

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Models to put banks offside

Citizens and businesses are now almost completely dependent on banks for their payment transactions. The vast majority of the population is a bank customer and they pay a lot for the services of a bank. Banks also demand a lot of money from companies where you can pay with a credit card, and they logically charge that to the end customer.

There are different models to think of where you can put the current commercial banks offside in the payment process. Of course that has always been cash, but now you also have services such as PayPal and of course cryptocurrency’s such as bitcoin.

And if adoption is driven by the private sector, think of Libra, then this can have a huge impact on the status quo.

Future is coming

Professor Duffie argued that the current system is not sustainable. Technology, economy and public pressure will ensure that the global payment system no longer belongs to banks.

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“The smartest banks will lead the way, but others will be reluctant to give up their old revenue models.” He had another message for banks such as ABN AMRO:

“The future is coming and that is not good for banks.”