How Exclusively Online Banks Impact the Banking Industry

Recently there has been a surge in the number of online banks that allow customers to interact exclusively with their online platform and take away the need for bank branches around the world. These banks usually provide better savings rates and fewer charges overall for their customers. These positive characteristics are driving more and more customers to leave traditional banks behind for their online counterparts. 

Online banks lack infrastructures and other overhead funds so they are able to provide customers with better rates and fees on all their accounts giving them higher APYs on savings. With traditional banks, a large amount of their money goes towards buying lands, building branch offices, and paying employees to meet personally with customers. Online banks run everything through programs that require fewer employees to maintain. 

Because their entire presence is online, online banks have a better interface for users than traditional banks. Their online services are a lot easier to use and require less customer service employees. One area where online banks lose is personal relationships. Since the entire banking experience is online, customers do not form relationships with specific bankers that allow for more discretion with loans later on. 

Online banks have their pros and cons, growing to become very competitive with traditional banks. Their innovative practices let them also beat out banks in APYs and interest rates every time. We will probably see a positive trend in the use of online banks over the next couple of decades. 

https://www.investopedia.com/articles/pf/11/benefits-and-drawbacks-of-internet-banks.asp

How Artificial Intelligence Will Impact Employment

Over time we have found that artificial intelligence is able to outperform humans in more and more activities. Previously economists held the belief that computers could only carry out actions based on a set of rules that humans encoded but now were a finding that computers have learned to create these rules. 

As artificial intelligence automatizes more jobs that capital with rise relative to the labor and the amount of labor necessary with decrease. There will be very few people needed to perform necessary jobs while the overall population will become more unequal and unhappy.

One of the solutions proposed to solve the upcoming displacement of workers due to tech is a change in our education. Rather than teaching students how to enter the work industry, they are taught to productively use leisure time. Another proposition is the idea of a universal basic income, a minimum income provided by the government to every citizen. Yet studies have found that giving people money is not enough, they have to have a purpose in life.

Overall, the rise of artificial intelligence is an impending issue that may change the entire infrastructure of our country. When most of the jobs are replaced by robots, what will the average citizens do with their time?

https://www.ft.com/content/84bcb90c-2588-11ea-9305-4234e74b0ef3

Why Electric Scooters Won't Last

The craze of electric scooters was one of the biggest of 2019, but this trend will likely not last. Simple analytics show that these scooters aren't bringing in the companies enough money to cover their costs. 

This new form of ride-sharing is extremely unsustainable, unlike its car counterpart. When considering unit economics, the revenue of each scooter, these products are not covering their costs. The unit economics for e-scooters are especially bad due to their lifespan which comes out to be a little under a month. When scooter can take a pretty limited number of trips, the companies are not making up the difference in the costs of the scooter before it is no longer useable. 

When experts calculated the average costs and profits of the scooters the numbers showed major losses. With each scooter making on average $2.32 each day and the average lifespan being 28.8 days, each scooter produces a profit of around $67 over its lifetime. When these companies are paying approximately $360 per scooters they are accumulating debts rapidly. These numbers don't even take into account the fees that companies have to pay the city for every scooter they install. 

Overall, electric scooters are not viable economically and companies will soon have to change direction. The idea of a city-friendly ride-sharing innovation was good in theory but does not work in reality.

https://www.theverge.com/2019/4/12/18307591/electric-scooter-sharing-bird-lime-uber-economics-big-picture

https://qz.com/1561654/how-long-does-a-scooter-last-less-than-a-month-louisville-data-suggests/

How Trump's Impeachment Would Affect the Economy

Trump has claimed time and time again that if the impeachment proceedings were to go through, the economy would fail and the stock market would crash. Statistics show quite the opposite to be true. Overall, investors do not seem to be worried about the proceedings, as the market is reaching all-time highs. It is likely that the "predictability of partisan politics has added some stability to a potentially volatile development."

Historically, changes in the market due to the impeachment of a president have varied case by case. During the impeachment process for Clinton, the stock market fell by 20% but later gained 41.6% after his impeachment. For Nixon, it was quite a different story. During the Watergate investigation, the stock lost over half its value, there were gas shortages, and inflated prices culminating in a recession that outlasted the Nixon administration.

Many times the changes in the economy depend on external factors and impeachment acts as a catalyst. During Nixon's presidency, the economy was already struggling while the surge in stock during Clinton's coincided with the dot com boom. Right now our economy is at an all-time high and there has not been a recession in the last decade. The actions of invested are probably influenced more by the on-goings in the market than the proceedings in Washington.

https://wjla.com/news/nation-world/trumps-impeachment-financial-markets-heres-what-history-shows

Facebook's controversial cryptocurrency

In March of 2019, Facebook announced a plan to create a cryptocurrency called Libra that is primarily used as a payment system internationally. It would be a simple way for people around the world to exchange money without the added conversion and services fees that banks ask of their customers. Libra would not actually be a cryptocurrency but rather it would serve as a monetary authority for cryptocurrency and help individuals without banks or stable currencies to exchange money safely.

Zuckerberg acknowledged that he plans to make Libra a stable currency, unlike other cryptocurrencies the swing wildly depending on speculation. This is achieved by using a bucket of assets mostly made up of bank deposits and government securities much like the U.S. dollar or the euro. This would separate Libra significantly from other forms of cryptocurrency and possibly make it the leading form of exchange online.

Facebook would benefit greatly from entering to market of sending money online. They claim that their product will simplify the entire process which probably attracts new people to the network. By adding new possibilities within their product, they are providing consumers with more incentive to use their product. Also, if more people used Libra, the costs of advertising would rise benefitting the company further.

Libra is criticized by many due to its association with Facebook and its recent scandals with security. Government officials and lawyers are very speculative of this new form of cryptocurrency many times try to discredit it as a whole. Despite the controversy, Libra is an innovative idea that may change the way many people exchange and send money in the following years.

https://www.cnet.com/news/heres-what-you-need-to-know-about-facebooks-controversial-libra-cryptocurrency/

Economic Growth of Electric Cars

Electric car sales have been pretty low for the past decade but with the start of 2020, they project an upward trend in sales. This transition in the market depends on the growth of the power grid and the growth in rooftop solar. In regards to the power grid, there is a large amount of infrastructure necessary to increase the incentive for consumers to purchase electric cars. Rooftop solar can also be a solution for lowering the demand for the power grid and decreasing the necessary infrastructure.

The challenges specifically concerning the power grid are starting to be addressed in California, which has the largest market for electric cars. Energy companies struggle to keep up with the large demand for electricity for these electric vehicles. The cost of the electricity stays extremely low probably due to subsidies from the government to promote the use of electric vehicles as an alternative to fuel cars. The electricity companies fear the increase in discrepancies in production with the surge to electric cars vehicles in California.

To address these issues companies are looking toward solar mandate for new homes that goes into effect in 2020. All of the new homes in California will have to have rooftop solar installed taking a load off of the electricity companies to produce enough energy for the increasing number of electric cars. Yet due to slow implementation, this solution has not proven to be as beneficial as previously projected.

https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/55903940

Decline of Financial Literacy

Financial literacy is declining primarily due to the lack of financial education. The gap between the haves and the not haves is closely related to rates of financial literacy proving that this issue impacts America as a whole. If changes to our financial education system are not made, rates of debt and the financial crisis will only continue to soar.

Despite some having basic knowledge of spending a truly, “literate” consumer will more likely make better decisions around borrowing, saving and buying financial products.” This includes knowledge about saving, investing and retirement funds that many Americans fail to even approach leaving them helpless on a rainy day. “Four in 10 working U.S. adults would not be able to scrape together enough money in a month to cover the cost of a midsize budget emergency . . . according to a 2017 report.”

One of the biggest markers of this decline is the rising rate of student debt. It is documented that student debt has more than doubled in the last decade. The country will only continue on the path of financial decay unless a change to financial education is made. Personal finance courses are important for everyone because they ensure that individuals do not make mistakes early on that dictate a life of financial struggle. Studies have shown that a “15-year-old American students who hold a bank account scored 40 points higher in financial literacy than students without one”. By integrating financial education into every student's life will help bring out a country out of financial decay. 

https://www.investmentnews.com/article/20190302/FEATURE/190229936/financial-literacy-an-epic-fail-in-america