Malcolm Byrne (Fianna Fail) | Oireachtas source

I thank the Minister for coming to the House for this discussion. The theme of the statements is the future of banking but, with the exception of Senator Keogan's comments, much of the discussion has been about the banking model that has existed during the 19th and 20th centuries. If the pillar banks of Bank of Ireland, AIB and Permanent TSB continue to operate as they do now, I predict that they will not exist in the 2030s. Those banks will be finished; they will be the Kodak of the financial sector.The challenge for those banks is to reimagine the digital services they will provide. I am not particularly optimistic, given the performance of the banks to date. In the area of an instant payment system, all the other banking operators in Europe are trying to develop a Europe-wide system, while in Ireland we have seen the banks clubbing together for an Irish-owned system, which will not be of benefit to consumers. I agree with Senator Craughwell that banks are not about serving communities; they are about serving their shareholders. In their approach to digital, the Irish banks have been particularly poor. In relation to where they are going, Ian Guider had a good piece in yesterday's Business Post where he noted that for any of us who have current accounts there is a flat monthly rate of €6 and that will be a floor. The banks will continue to look at increasing those charges. Ultimately, it is the consumer that will make the decision as to where he or she wants to go. Consumers are leaving the traditional banks in droves. They are moving to Revolut, which has more than 1 million customers, and N26, which now has about 200,000. We are moving towards an era of decentralised finance.

I agree with Senator Keogan about cryptocurrencies. The cryptomarket cap crossed over the $2 trillion mark on 21 April. Regarding decentralised finance, we are now looking at a global market of US$42 billion. This is where finance is going. In terms of offering peer-to-peer loans, savings bonds and all the traditional products people are looking for, consumers are making the choice to shift in a different direction. Colleagues talk about the impact on main streets of branches closing and I have seen it in my home town and others. The best illustration that there is no future for retail banks is not the small town branches but the third level campuses. AIB has just closed its branch in University College Dublin, UCD. When I was a student, the banks would kill each other to win the franchises there. The traditional retail model is gone.

As for trying to help the other retailers on the main street, I will outline what will happen in a few years' time. If the Minister or I want to buy a new shirt, we will go for the retail experience in our local menswear store and stand in front of a machine that will measure us. We will use our phone and pay through a digital currency from our digital wallet. That is how the payments and everything will happen. The best thing to be done for those businesses is to abolish commercial rates, which is a completely unfair tax that penalises main street and high street stores working against online competitors.

A number of crucial issues around the future of finance and banking need to be addressed, particularly around regulation and control. When Facebook proposed introducing the Libra currency, there were serious questions. The tech giants already have a hell of a lot of power. If they start to move into the digital currency environment, there are serious questions for the Government and others to address.

Nationally, we need to look at some of the issues around the Central Bank. All the Central Bank's website gives is warnings about cryptocurrency and blockchain. There does not seem to be a strategy. We need clear regulatory and legislative rules that will allow for innovation in the blockchain space. We need a regulatory sandbox to allow new companies to emerge. The Minister should amend the functions of the Central Bank in order that one function is about encouraging competition in the banking market. Unlike other central banks, it does not have that function. China has already talked about introducing a digital yuan and as the Minister is aware, there is a decision to be made at European level. I support the introduction of a digital euro but it is important that we start to have this conversation.

If the forum on the future of banking becomes a forum purely for the preservation and protection of the existing banks, it will fail. We need to put consumers at the heart of what we are doing. Arguably, the biggest piece of financial services innovation we have seen coming from this country has been Stripe from the Collison brothers. I would rather have people like the Collisons in charge of the forum on the future of banking. I want young people involved but the Minister has to be imaginative. This is about the future of banking, not the protection of the existing banks.