Oh dear. Ireland is about to conduct the most tumultous banking transition witnessed in a developed economy for years. Forgive my anxiety, but I’ve had the misfortune to experience the double-Dublin treat of hospital A&E and airport chaos in recent weeks. More than a decade ago a national newspaper quoted me as saying “Scandinavian tax rates, African execution”. If anything, it’s now even worse. How long before Irish taxpayers jump in one of Priti Vacant’s dinghies, paddle the English Channel and pray for a Rwandan transfer? Anyway, back to real transfers, banking transfers. Well, that’s the hope. Here’s the Irish banking reality game show…..

The departure of Ulster Bank and KBC from Europe’s most over-priced banking market means 1 million current and deposit accounts must be moved to new banking homes in the next 6 months. This is the biggest movement of bank accounts in the history of the State. Existing customers of KBC and Ulster Bank have two options to move accounts:

  1. Contact new banking platform directly – digitally or in person.
  2. Use a Central Bank switching code which apparently makes things easier.

Now, let’s think about mortgage payments, utilities, direct debits, social welfare etc. Option 1 is more complex than you might think and recent anecdotes are already filled with waiting times running into months. Option 2 might be the better bet until you hear that this switching code was set up almost twenty years ago and switches completed with this code in 2017 and 2018 amounted to just 5,200 and 2,000 respectively. No wonder the Central Bank’s director of consumer protection, Colm Kincaid, told a parliamentary finance committee that arrangements for this seismic market disruption “are not where they need to be at this stage”. You just know it’s going to be painful, expensive and stressful for thousands of people. However, there might be a future upside….

If we think about the challenges of this banking transition we can break it down into 5 key segments which I will do my best to describe in lay person’s terms. Here goes….

  • Change Bank: In reality a customer is moving his/her details from one centralised database to another ie they are separate information locations. 
  • Identity: The customer must establish a unique identity with the existing or new bank account(number) which will be hosted on the new database/platform.
  • History: The existing account will have a history/track record of relationships with various counter-parties; employers, mortgage lenders, utilities, waste, mobile companies, clubs, gyms, credit/debit cards etc The new bank will probably need to upload most of this information on its own centralized database.
  • Payments: The existing bank account will possibly already have some basic automated instructions to continue paying these counterparties. These instructions will also need to be uploaded to the new hosting database.
  • Security: The customers in switching their accounts will need new security arrangements – passwords, logins, mobile verification etc

So, the number of actions to achieve the above list of transition requirements is going to run into the tens of millions. The cost, the hours, the repetition is mind-boggling. And…this should never happen again. For a while now, I have been bombarded with crypto and metaverse sceptics challenging me to come up with a real problem that existing Web2 digital technology cannot already solve. Well, this might be the metaverse moment. I have deliberately bolded some key words above and would suggest the metaverse and blockchain will be critical to creating a more efficient financial system and opening up the banking system to the unbanked or the badly banked. Consider the following as the current proven deliveries of blockchain and a decentralised metaverse. In the same order as my task list above…

  • Change Bank: The metaverse is decentralised so Web3 users will be able to seamlessly move between all “real estate” on the web. Think about how you can use Facebook or Google logins to access your favourite apps, but not all of them. Web3 changes that because….
  • Identity: A Web3 user’s digital wallet will establish a unique identity and effectively act as a digital passport across all Web3 applications, sites, worlds, games, finance etc
  • History: As you know crypto currency is the economic backbone of Web3. However, far too much time is wasted on analysing crypto ‘valuations’. The far more important function underpinning all crypotcurrencies, tokens and NFTs is blockchain and a record keeping ledger which cannot be interfered with.
  • Payments: Blockchain is not just an encrypted record keeper. It is also a computer programme. That means smart contracts (automated instructions) can be embedded in your digital wallet(unique identity) and can be transferred seamlessly across multiple Web3 locations.
  • Security: The clue is in the crypto bit. Encryption and decentralized verification are major security features of blockchain and cryptocurrencies.

I have tried not to bamboozle with metaverse jargon but, for the avoidance of doubt, blockchain and a decentralised Web3 is a financial hyper-sonic weapon. It won’t help the Irish banking system this time but there are thousands of the brightest people on the planet moving to work on the most exciting real-time blockchain/metaverse experiments ever seen in finance. Many projects will fail but the blockchain one-stop super powers of Identity, Movement, Ledger/Verification, Smart Contracts and Security will some day soon make all our lives easier. Not perfect, but more Wakanda than Rwanda…….