The widespread use of technology has revolutionized the banking industry, making it much easier for customers to access and manage their assets. Does this mean that the shoe-leather costs of inflation are higher or lower than they used to be?

The shoe-leather cost is the cost that arises due to increased transactions at times of inflation. During inflation, people try to convert their money to some assets or other securities and foreign currencies so that their purchasing power does not get eroded due to high prices during inflation.

For example, during 1921-1923, German hyperinflation merchants employed laborers to take their cash to banks several times a day to convert it into assets that would hold their purchasing power value. This increased the number of transactions, due to which the number of employees in banks increased, resulting in increased shoe-leather cost.

If the technology takes over man and makes it easier for the customer to manage their accounts and assets, they would not need to hire laborers to take their cash to the bank at the time of inflation. This will reduce their number of visits to the bank. Increased transaction will not make banks hire more employees since customers could do all those things by themselves electronically, thereby reducing the shoe-leather cost.