The world is moving swiftly into electronic money and steering away from physical money transactions. It’s not only newly introduced cryptocurrency that is leading the change, it’s mainly banks and electronically currency service providers who transact money via electronic fund transfers (EFT).
In fact, recent statistics have demonstrated that electronic money constitutes for more than 90% of all transactions, and this trending is expected to increase over the course of the years, with the expansion of digital payment options.
It is reasonable to believe that moving away from traditional banking towards online banking (which also consists of moving from physical bills and coins into e-money) will have a positive environmental outcome, for the following reasons.
1. Less Paper Trail: Paper is bad for the environment – It is estimated 40% of the waste in the USA is paper. It is also estimated 30m acres of forest are destroyed every year to enable its intense production. In addition, paper material by itself is one of the reasons for the ozone depletion – when paper rots it emits methane, and when it’s burned it emits carbon dioxide, and as stated previously it is consumed in massive numbers so the impact is undeniable.
Traditional banking is heavily reliant on massive amounts of printing. Banks are almost synonymous to the term “lengthy contracts”. Every activity is immediately documented and printed out on the expense of the environment with very little regard to ecology. Some clients could induce hundreds of thousands of paper waste every year.
Moving to a bank system which is purely digital (sends all notifications and invoices via email) would vastly reduce this waste, and thus should be eco-friendly.
2. Less Travel Time to Bank: We all know how bad car pollution is to the environment. Oxides of nitrogen emitted by vehicles is one of the main threats to the well-being of this planet. Some mega-cities in the U.S are particularly polluted because of their sheer size, and vehicle ownership usage behavior (Los Angeles is the largest, most car-dense cities, and in correlation to that also one of the most polluted cities in the country).
In such metropole is people almost surely drive their personal vehicle to the bank, and even to the nearest ATM to withdraw cash, and that could be largely prevented if online banking and digital payments would take over traditional banking completely.
The above still remains vastly unproven.
In terms of paper trail – although banks are reporting to increase the effort, in reality the consumption numbers haven’t changed much over the banking industry. Some banks which claim to have “green” accounts, which are merely publicity stunts. The British Guardian have openly criticized HSBC bank which claims to have eco-friendly accounts, for their misleading approach.
Scientific papers like this one from the International Journal of Environmental Science and Development state that moving from physical shopping to online shopping isn’t necessarily an “environmental prospect” and imposes threats of its own. The same logic can be applied towards the shift from traditional banking to online.
To conclude, there should be more researches made on this topic before we can accept digital banking as an eco-friendly solution as some banks tend to present it.