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The Digital Skeptic: What Do Banks Do With a Generation That Doesn't Bank?

Can't be bothered with a bank
When I asked other young people, particularly fellow nerds, about this notion of a nouveau cashless economy, they absolutely agreed with Paul. Take Alon Gilboa. He's in his early 20s at the University of Missouri studying computer science and journalism. He is no slouch, and in his view digital tools such as cellphones and tablet computers make it so easy for the young to get their needs met that money and the banks that manage it play less of a role. 

"For kids today, everything is so digital that you just get stuff," he says. "And when you're on the iPad, everything is just sort of there."

And darned if the shivers of the declining digital age are not flowing down the spines of the bank sector and its investors. Remember, most of what banks have devolved down into in the information age is a business that manages a vast digital money-moving network. That means that, just as in the music, publishing and economics profession, today's consumers are figuring out that information on these fiscal networks is not worth that much. So customers are demanding more from those who move money for less. That means the same deflationary pressures found in the music business are happening in the banking business. And much worse, this downward digital spiral is taking place in a banking sector rightly awash in customer cynicism.

"I just don't want to be involved in organizations like that unless I have to," Paul says. "I could see getting money to pay a mortgage. But I will be very careful about that."

If you as investors are betting that these kids are the exception to the rule and that today's young believe banks are the only place where they can put their wealth, consider this: A banker up the road from here was known for the "2BIG2FAIL" on his Porsche's license plate. He recently changed it.

The neighbors say it's because it was rude. But I figure it differently. He knows what's coming.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.
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