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The Banks of Tomorrow: Think Google and Facebook

When you swipe your debit card at the grocery store, no one walks into a bank vault looking for a box with your name on it.

If you’re among the 90 percent of Americans with a bank account, you’re not exactly storing a personal stack of bills under lock and key. Your money is data — a series of ones and zeros. Sometimes, you convert these numbers into greenbacks at a nearby ATM, but mostly, you just shuffle them in and out of your account, with things like electronic bill payments, direct deposits, debit card transactions, PayPal trades, and maybe — if you’re old school — the occasional paper check.

Banks provide other things too, including, well, a guarantee that your money is safe. But the thing to realize is that so much banking happens digitally, and in many cases, the world’s digital banking services aren’t even operated by banks.

>’After being in the business of serving banks for the better part of a decade, this has got to be one of the worst industries on the planet for innovation’

Joe Polverari

For more than a decade, a company called Yodlee has helped big banks power their online services, including Citibank and Bank of America. And other new-age companies, such as Moven and Simple, now offer banking services you can use even if you don’t have a direct relationship with a traditional bank. Which makes you wonder: Do we even need banks?

The reality is that we still need them quite a bit, not least because that’s the way the government regulates the financial industry. But their influence on our personal lives is waning, in large part because they haven’t kept up with the times. “After being in the business of serving banks for the better part of a decade, this has got to be one of the worst industries on the planet for innovation,” says Yodlee chief strategy officer Joe Polverari. “The banks were not willing to enable access to stuff that people wanted as fast as people wanted.”

What this means is banks will gradually disappear into the background of our financial lives. In the future, your bank will look less like your bank — and more like Google or Facebook or Apple.

Despite his criticisms of the banking industry, Polverari isn’t anti-bank. Banks are his biggest customers. When you use an online banking site, you may well be using Yodlee software. According to Polverari, the company’s tools ultimately touch about 50 million consumers, though most wouldn’t know it. “We are the most silent of the big data companies out there,” he says.

But now that they’ve got a foot in the door, Polverari and company are going even further, giving people services that banks can’t — or won’t. Yodlee software also powers personal finance apps such as Learnvest1, which pairs your bank accounts with your car loan, mortgage, and retirement accounts, digitally aggregating the most all the data that constitutes your financial existence. And, more recently, Yodlee began offering application programming interfaces, or APIs, for its software platform, letting all other companies and software developers build new applications that juggle your financial data (provided you opt in to such things).

Meanwhile, a similar endeavor is underway at Moven and Simple. These companies offer banking apps that combine Learnvest-style planning, tracking, and goal-setting with traditional online checking and savings account services. They even send you a debit card. When you use these apps, you treat them as you would a bank.

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