David Birch Says Digital Money, Assets, and Identity Are the Future of Banking

Wednesday, June 18, saw the start of EBAday 2024 in Lisbon — the annual summit for leading payments and transaction banking executives. During the first day of the summit, David Birch, an author, advisor, and commentator on digital financial services, held a speech titled “Digital Money, Digital Assets, Digital Identity: The Future of Banking.”

David Birch Sees Tokenization As The Future Of Finance

Birch decided to join the summit with a challenge speech, stating that decentralized finance will dominate banking evolution. Furthermore, he insisted that tokens are what the next generation will rely on for making transactions.

Commenting on the future of finance, he said: “Tokenisation will be driven by money people, not technology people, and as it will be vastly cheaper, it will drive more liquidity into that space.”

He explained that digital identity will grow to be a major theme of the financial market infrastructure of the future. However, before that can happen, resilience needs to be established in European payments.

He continued by outlining the significance of fungible and non-fungible tokens, stating that they will play a major role in the near future. He views fungible tokens as the future of payments, while NFTs will be the future of property.

“So we have this burgeoning token, and in that token economy, we see the new financial infrastructure being built. You can see the steps towards this. We’re in the stage now where people are doing the initial experiments. We’re looking towards interoperability, and soon as we will see this new financial market infrastructure growing where ledgers are coming up,” he explained.

Birch Shares Thoughts on CBDC Regulations and Digital Identity

Moving on with this speech, Birch argued that central bank digital currencies (CBDCs)would provide additional resilience to the European banking system. He specifically pointed toward wholesale and machine CBDCs, which would enable more efficient supply chains.

He also reflected on comments from previous panels, noting that CBDC regulations must be more resilient. He believes that there is a need for a new, separate infrastructure instead of just building on top of the existing one.

With the UK coming ever closer to introducing and using the digital pound, he commented on the country’s CBDC strategy. He joked that there is no long-term strategy for the CBDC, payments, or anything but that the Bank of England believes that the digital pound would be crucial.

With that said, he pointed out that the digital pound doesn’t need to arrive tomorrow, suggesting that it would be better to work on an efficient, high-quality digital currency that would actually work well rather than pushing a barely finished product out on the market just to have it done quickly.

As for digital identity, he said that it must be built to facilitate CBDC and that there are often misunderstandings of what digital identity is. He stressed that this doesn’t mean scanning one’s driver’s license or passport. Instead, digital identity is smart and interactive and built for the purpose of being digital. As such, it will likely change on a daily basis. It is fluid, and it needs to be understood better.