PayPal CEO Calls for ‘Democratization’ of Banking

cash moneyPayPal continues its big PR push following its official split from parent eBay last Friday. In a new op-ed written for CNBC, the company’s CEO, Dan Schulman, decries the costs associated with traditional banking and suggests that technology can help to democratize the overall banking system.

His argument is essentially that new, disruptive technologies can improve consumers’ access to banking services at lower costs than those associated with traditional banks. And those costs can be significant: “In the United States, for example,” he writes, “it can cost around $60 a year to maintain a checking account, $3 or more to make an ATM cash withdrawal, and $30 per transaction if you bounce a check.” He proceeds to argue that what the World Bank and other economists refer to as “financial inclusion” – making sure people have fair access to financial services – is both more fair and economically productive.

Schulman concludes that a better banking system would be based on three foundations: First, “open, easy access to digital financial systems and networks”; second, guaranteed “safe and secure digital transmission for all transactions”; and third, “equitable and affordable financial participation in the economy.”

Without being too explicit about it, Schulman is basically making the case for PayPal as an alternative banking service. Over the past several months, the company has been expanding from its original role as a facilitator of online digital transactions, moving into the area of mPayments and also gesturing towards international money transfers. Other tech companies are exploring such disruptive financial areas as well, most notably Apple with its Apple Pay mPayment platform; but by solidifying its brand as an overall trusted facilitator of banking alternatives now, PayPal may be aiming to get an upper hand when it more aggressively moves into the mPayment space later.

Source: CNBC