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Will cash remain an attractive asset in a digital future?

Published November 4, 2021

By Karol Slominski

Reports declaring the demise of cash in the wake of the pandemic have been greatly exaggerated. Yes, contactless payments will continue to gain ground and financial institutions will aggressively pursue digital transformation. But, these same institutions would be remiss to neglect wide populations of cash-carrying customers.

To accommodate this market, financial institutions must make best use of technology to ensure these customers can withdraw and deposit cash more easily than ever before. Offering convenience and fast access to cash will continue to be a differentiating service for financial institutions during the pandemic and beyond.

Cash payments will remain a significant option for many

Consumers will continue using cash beyond the pandemic because they have more confidence in its resilience, prefer the privacy and security it provides and, in some cases, because it is their only option.

Despite a decrease in cash use for goods among U.S. and European consumers, there is more cash in circulation because U.S. and European consumers are keeping more cash on hand as a safeguard against uncertainty.

Pre-pandemic studies show an estimated 9.3 billion in cash payments were made in the UK in 2019, and they accounted for nearly one-quarter of all payments. The world had fewer opportunities to pay with cash since the pandemic’s onset because of policies mandating business closures, stay-at-home orders, and other public health measures. Cash payments are likely to rebound as countries loosen restrictions.

And while younger generations show a propensity to use digital forms of payment, there are still 2.1 million people in the UK who mainly used cash for their day-to-day purchases, according to UK Payment Markets Summary 2020.

When asked why they still use cash, many consumers indicated that their local businesses still only accept cash. Other consumers use cash due to privacy and security concernsor as a backup in case technology fails.

In the U.S, payment choice is essential to consumers, and the ability to pay in cash is as important today as it ever was. While the COVID-19 pandemic may have changed a lot about American society, it didn’t alter consumers' desire to use cash. As digital platforms become increasingly popular in the payments industry, conversely, cash usage is vastly underrepresented.

A recent study by Javelin Strategy and Research and sponsored by Cardtronics, The Health of Cash and Its Role Expanding the Digital Economic, explores how the digital economy benefits from cash usage and consumer preferences for safe and easy commerce. And despite recent increases in digital payments, cash is still a consumer favorite when it comes to spending in the U.S. In fact, cash rebounded faster than other payment methods during 2020 and even remained a leading method for making purchases throughout the pandemic proving its resiliency. 

The study shows that Americans use cash for everyday purchases, making it a key component of the U.S. economy. Findings from the study demonstrate how cash remained relevant for most consumers throughout COVID-19.

  • 66% believe cash protects privacy and financial security
  • 63% think allowing people to pay in cash is important for society
  • 58% agree that cash is safe to use
  • 54% believe cash is as important today as it ever was
  • 44% consider cash as the easiest way to pay


Related: Cash trends in a digital world

Cash will remain a vital social and public infrastructure

A cashless society would likely hurt the poorest people the most because they have the least access to the tools needed to make digital payments, and many don’t have access to a bank.

For example, 7.1 million American households are unbanked. In the UK, one in 10 consumers can’t get or don’t have access to a credit or debit card.

Because a cashless society would hit low-income households hardest, some entities like the European Central Bank are actually calling for regulations and ensuring cash is universally accepted by merchants. Several U.S. states have sought to pass similar laws.’

According to the Health of Cash Study, in 2020, approximately 22 percent of U.S. consumers were underbanked. Underbanked households are defined as those who may have a checking and/or savings account but rely heavily on alternative financial services such as:

  • non-bank money orders
  • non-bank check-cashing services
  • non-bank remittances
  • payday loans
  • rent-to-own services
  • pawnshop loans
  • refund anticipation loans
  • auto title loans

As digital payments continue to expand, financial institutions must find solutions that maintain cash as a viable payment option for marginalized populations. For example, we see year-to-year that underbanked consumers still prefer cash for services like curbside delivery, takeout, and personal services, choosing to use cash over debit and credit cards.

ITMs will play a critical role in customer experience

A cashless society isn’t imminent, which makes the role of modern interactive teller machines, or ITMs, an important tool to connect financial institutions to their customers.

These machines are critical for financial institutions to attract and retain customers. User experiences don’t just occur on websites, mobile apps, or at the bank branch. They span all channels and touchpoints. So, institutions must pay attention to the experiences created at the teller machine as well.

However trivial a simple withdrawal or deposit may seem, it can actually have a large influence on how customers perceive their financial institution. This starts by ensuring the instructions on the machine are clear and intuitive, and all actions are easy to perform.

Then there’s the question of what choices the customer has when interacting with the machine. Teller machines that offer customers a variety of ways to interact with their financial institutions will become an increasingly important differentiator for these FIs. Users will want the option to use not just a debit card, but also a smartphone and potentially even biometrics, to identify individuals by their unique physical characteristics.

While widely available, fingerprint scanning and facial recognition software are yet to go mainstream for banking. Nevertheless, financial institutions must make smartphone access to their teller machines an option, just to keep pace with consumer demand for faster, more secure options for using teller machines.

When customers do use a machine, it must have cash available. ITMs offer cash recycling, which makes it less costly for financial institutions to ensure a machine never runs out of cash. Recycling allows deposited cash to be reused for cash withdrawals, lengthening the replenishment cycle and reducing downtime.

From a strategic standpoint, cash recycling capabilities are critical for a financial institution to save money and serve customers. Cash recycling saves FIs on “cash in transit” management, and it means less cash must be taken out of circulation for the less productive purpose of being stored in a machine. It also saves labor costs because an ITM will automate some of the processes previously done by tellers back at the branch, like counting, recounting and reconciliation.

Technology will make cash easier to access from anywhere

Today’s customer demands access to services regardless of time, day, or location. Financial institutions must be ready to meet this demand through a digital transformation of their traditional services.

For example, BLIK is a Polish app that lets customers access an ATM remotely using their smartphone. This is not just a novelty. It can enable a parent to send their son or daughter cash while they are on holiday 1,000s of kilometers away. Similarly, the same parent can tend to the finances of an elderly family member, who perhaps doesn’t want to keep cash at home, by receiving a call from the elder and relaying the code. Then, the money is ready for pickup at the machine.

The need for quick access to cash is not limited to retail customers. Financial institutions must cater to the cash needs of their commercial customers as well. That means ensuring merchants can place online cash delivery orders, or order cash pickups online to retrieve at their convenience. This saves busy merchants valuable time.

Read about NCR VOYIX Pay360, our cardless solution for instant cash access

One way to do this is through cash deposit safes, which are like ATMs, but only for the business where they’re installed. Merchants can deposit and withdraw from this personal ATM, saving a cash run to the nearest branch.

Tools like BLIK and cash deposit safes are how financial institutions should think about cash now and in the future. Don’t think about cash disappearing; think about where the market is today and how to improve the customer experience.

Cash isn’t going anywhere anytime soon

Digital transactions will continue to increase, and cash will remain strong. With that in mind, it’s critical that financial institutions deliver an unparalleled customer experience when it comes to depositing and withdrawing cash.

New technology is part of that, and as new tools and new types of machines enter the market, cash management will grow increasingly complex.

The next step for financial institutions is to ensure they have a resilient, strategic cash management plan as they undertake the digital transformation of their bank branches to meet their customers’ cash needs now and into the future.

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