Welcome to my “daily comment.” The ground rules Ceres and I have agreed to are simple. I can write whatever I want, ranging from a sentence to an epic, and nothing is off limits. I can even say things like, “Don’t trade stocks yourself — for most people, it’s smarter to invest through no-load mutual funds.” Which it is.

According to a recent article in Fortune, banks held 54% of of the financial assets in U.S. institutions in 1980 — versus just 32% or so today. And banks now hold just 17% of consumer cash (in checking and savings accounts). Wow! Where’s the rest? Much of it is in money market mutual funds, and money market funds tied to brokerage accounts.

Will much of the rest of it soon be in “digicash” balances held for you by such trusty souls as Microsoft and Intuit?

I remember sitting next to Walter Wriston, then Chairman of Citicorp, just before the Apple II made its debut, and his saying banks weren’t really in the banking business, they were in the information business — the business of moving bits of electronic information around the world.

This is doubtless one of the reasons he turned over the reins to the youngest and most computer savvy of his potential successors — John Reed. At the time, I didn’t really grasp what he was saying (which is why he was chairman of Citicorp and I was just one of several dozen dinner guests, but lucky enough to be seated to his left). But here we are, just a moment later (from the perspective of human finance), and guess what: banks as we long knew them, those most permanent of granite edifices, may just sort of merge into the cyber landscape.

This is good, of course. It’s “financial power to the people” and no more teller lines or having to rush to the bank before it closes. (Many of you are too young to remember, but ATMs are really only about 20 years old. Before that, any time you wanted $100 in cash you had to get to the bank before three o’clock and stand in line.)

It’s the prospect of being able to shop for mortgages “on-line.” (The Automatic Loan Machines I mentioned in an earlier comment are definitely coming to a bank branch — and perhaps a supermarket — near you, but will eventually be eclipsed, I should imagine, by cyber-loans applied for in “real time” over the Internet.) It’s the prospect of no longer leaving idle balances you earn no interest on, or bouncing checks because you’d lost track of your checkbook.

As for the bank buildings themselves, what are they to become? Discos? Perhaps. Or maybe high-end storage vaults. You know: like those “Shurgard” deals you can rent for your old books and records? They’d just expand the vaults and safe-deposit box department. A good place to store your valuable back-up computer disks.

Tomorrow: Ascend Communications


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