The cashless revolution seems to be taking a grip as banks shut branches and rip out cash machines, but it’s really a self-fulfilling prophecy.
The way the phenomenon works is banks are claiming their customers are ‘going digital’ and no longer need a local branch to conduct their financial business, so the bank is closed.
A lot of us have gone digital – but that’s mainly because the local bank has gone and there is no longer a choice of where to access money.
The way this happens is customers are trapped in a loop.
The banks shut their branches and withdraw cash machines, insisting customers are moving online.
But the customers are really moving online because they can no longer access bricks-and-mortar banking services.
In effect, the banks are forcing customers to opt for a digital service.
The theory behind the strategy is called ‘nudging’ and this plays a key role in behavioural economics – or how to make people do things without being obvious.
Technically, theorists explain nudging pushes people towards desired behaviour by manipulating their choices.
You can see nudging take place elsewhere.
Stations with ticket machines and no manned office, shops with self-checkouts and airports where passengers drop of luggage and print their own boarding cards.
Going digital is not about customers making a choice, it is about businesses taking away choice to save money.
Behavioural economics allows them to cut costs by shifting tasks to customers and slashing jobs.
The next big development in behavioural sciences is the blockchain. No one really cares if companies and governments adopt blockchain technology or not, but faster, quicker and more transparent software apps mean the idea is attractive to businesses that can cut more staff and expenses at someone else’s expense.
Nudging is turning you into a sheep gently prodded to do what the shepherd wants by a circling dog.
Banks want to nudge you into their electronic pens, so you spend your money digitally. This helps them make more money and to deliver bigger profits as dividends to their shareholders.
Playing a part in the digital economy is accepting the onset of behavioural economics.