Seven years from now people will not go to the branch or log on to the Internet to do their banking.
Rather, electronic assistants in the form of personal financial "bots" - short for robots - will scoot around the Internet, balancing checkbooks, allocating excess funds to various accounts, paying bills, and even shopping.
So says Rainer Famulla, a partner in the Washington office of Andersen Consulting and the author of "Fault Lines," an Andersen study that explores the future of financial services.
The upshot of the bot invasion is that traditional banking is doomed, Mr. Famulla says. The only financial institutions that will survive will be those that work with technology companies to make their services available through bots, he says.
According to the study, bots will receive the owners' paychecks every day - bimonthly checks will be obsolete - and will divvy up the funds as their owners see fit, continually searching for better rates and sweeping money here and there as they encounter increasingly better deals.
The obedient bots will search the Internet tirelessly for bargains, the study says. They will be able to read the bar code off the tag of a pair of shoes waved in front of it, and sniff out a better price.
Surprisingly, several bankers agreed with major aspects of Andersen's findings, but they maintained that in seven years banks still will have plenty of opportunities to serve customers, whether bots become a significant factor or not.
"Banks own one thing that no one else owns: absolute trust," said Chester L. Thompson, who last month became vice president of marketing and communications at the Internet banking software company S1 Corp., after heading up Huntington Bank's Internet banking effort for many years. "It's not so much that [people] think bankers are good guys, but they are backed by the government."
If banks act on the trust factor, they will play an integral role in the new technological environment, Mr. Thompson said.
Mr. Famulla disagrees. "Success in this new environment demands capabilities that traditional banks, investment firms, and insurance companies do not currently have," he says in the report. Financial institutions have a slew of obstacles that many new entrants do not face, including aging technology infrastructures, risk-averse investment approaches, and bureaucratic decision-making, he says.
Bots have already begun their advance into financial services, Mr. Famulla says. "We already have aggregation companies that bring all of an individual's accounts on one Web site, as well as companies like Priceline.com that work to find the best deal for you."
Lawrence G. Baxter, executive vice president and head of Wachovia Corp.'s e-business division, said the influx of bots is inevitable and presents a "very real" threat to banks' current infrastructures.
Bots will probably take over the management of day-to-day banking tasks, Mr. Baxter said. "We are wrong to think that financial services is such an exciting phenomenon for the general public. Most people see these things as chores to get out of the way."
The influx of bots is likely to follow the same course as earlier technologies, Mr. Baxter said. For example, the automated teller machine has largely replaced interaction between bank employees and customers, and automated credit scoring has largely replaced credit underwriting, he said.
"As we look back at the sweep of technological automation, it is incredible how much has already been automated," he said.
Consumers initially will use bots to invest in smaller commodities, such as certificates of deposit or loans, Mr. Baxter said. Once the consumers are comfortable with that, they will move on to bigger investments, such as mutual funds and equities, he said.
At the highest end of the market, however, bots will generate demand for more personalized financial services, he said. "As I accrue more wealth, I would rather have a very well-trusted and technology-supported financial adviser to take care of me, or at least a human being that could set me up with the technology."
The margins at the high end will justify the cost of human advisers, he said.
Mr. Famulla agrees that financial advisers are not likely to be replaced completely, but he says that much of what they do will be automated. "Right now if you go to a financial adviser, they all ask you the same questions they learned in the courses," he says. Bots would "automate that process, so the adviser already knows all that information."
Mr. Baxter said banks have a fighting chance against the bots. The Andersen report does not take into account the value consumers place on working with an institution they know and recognize, and the trust factor should not be underestimated, he said. "The large number of people will buy from the brand they know and trust, and not necessarily just based on the best rates."
All the same, Mr. Baxter said he is worried about potential shifts in consumer loyalty. "It makes it very challenging to know what the customer relationship is. We, along with the rest of the economy, are trying to figure out what to do as the power is shifting to the consumer in a very big way."
At the moment Wachovia deems itself in control of the future. It is working to be "a facilitator to consumers," by getting them comfortable with online banking, Mr. Baxter said. The next step will be to add account aggregation and personalize the bank's Web site, he said. "These things all play upon the bank-to-consumer relationship, but what happens when it's the customer who is in control, and it becomes customer-to-bank? That is a huge leap across to a cultural level that is far different than we know."
For Mr. Thompson, this shift in control from banks to consumers as they gain more access to information is one of the most noteworthy findings of the Andersen study. The announcements by major banks that they plan to offer account aggregation is a clear sign that they are preparing for this shift in power, he said.
Aggregation lets consumers consolidate all of their financial accounts - no matter which institution holds them - at one Web site. After initially shunning the practice, many financial institutions are acknowledging consumers' intense interest in the service and have taken steps to adopt it.
"A few years ago there was no way a banker would allow another institution to get their customers' information and post it anywhere they want to," Mr. Thompson said. "But now they don't have a choice, because customers are demanding it. Banks blinked a little, but they got it, and now no one is a greater proponent of aggregation than banks."
There is "no question" personal financial bots are on the horizon, Mr. Thompson said but he is skeptical they will be prevalent in seven years. "Most of these things are easily imaginable right now, and many are doable right now, but I might not be as aggressive in assuming how quickly consumers are going to adopt this."
D.R. Grimes, chief executive and vice chairman of NetBank Inc., said the trust factor will keep bots at bay and financial institutions in control.
"While I agree with the report that we are entering an era where consumers will have consolidated financial information, I think banks are the ones who will be doing it," he said. "I just don't see a large movement en masse away from accounts insured by the government."
Mr. Thompson and Mr. Grimes agreed that partnerships will be critical to the survival of banks in the future.
"It is unlikely that one company could be the dominant provider of technology in all areas," Mr. Grimes said.
"Banks have to pick up more partners to handle the risk and offer more products," Mr. Thompson said. "They cannot continue to be the stodgy businesspeople they have been in the past."
NetBank already has started down this road. Last month it entered into a partnership with the online broker Ameritrade Holdings Corp. to provide combined banking and brokerage services.
The bank also plans to create a portal that would offer to make its account the centerpiece of a consumer's financial life. The site would let customers make transfers, receive financial advice, and use planning tools.
Mr. Grimes said NetBank will also offer a range of "other services, some of which will extend beyond what we think of banking relationships today."
Mr. Famulla says is on the same page as the bankers when it comes to partnerships. It is only a matter of time before financial institutions and technology companies establish partnerships to create "best of breed" bargain-finder capabilities in the form of bots, he says.
Bots are "going to be a big driving force in intercompany cooperation," Mr. Famulla says. "We are going to see the companies that create the electronic devices look for partnerships with financial services companies."