Banking re-imagined: Why consumer choice matters more than ever

By : Colin Gordon

February 02, 2020 08:00 AM

Find out why offering a choice of banking options is vital in an era where digital tools and traditional physical banking channels are increasingly operating side by side.

 

With a new range of digital-only challengers and alternative financial providers proving ever-more popular with consumers, traditional banks also need to change to stay relevant in 2020 and beyond.

 

Questions over the future of the retail bank continue to center around what services consumers will come to expect over the next few years, and what role the physical branch or ATM has in meeting those needs.

 

While some argue the days of the local branch are on the way out—as more people switch to digital services and the alleged move to cashless societies impacts self-service banking—the reality is much more complex. In fact, what customers in today's society want most is choice. And this includes an easily-accessible physical option alongside convenient digital banking options.

 

 

The combination of cash and cashless

 

With contactless payment cards and the emergence of NFC-enabled smartphones that support the likes of Apple Pay and Google Pay, consumers have more choice than ever when it comes to how they pay.

 

In the UK, for instance, cards overtook cash payments in 2018, and more than half of these payments were contactless. Meanwhile in Sweden, widely regarded as the most advanced cashless society, only around one in ten payments use cash.

 

However, the future for the cashless society is not that certain. Indeed, as cashless solutions have become more commonplace, there has been somewhat of a backlash towards the concept. For instance, several cities and states in the US have brought forward local laws that prohibit businesses from going completely cashless in the last year or so in response to this trend.

 

One reason for this is to protect the unbanked and underbanked for whom cash remains a lifeline. While some countries, such as Sweden, have successfully made the transition to a nearly cashless society, it's clear that for many places around the world, including the US, cash will still have a central role to play for years to come.

 

The importance of self-service continues globally. According to the recently published RBR Global ATM Market and Forecasts to 2024 report, the world’s three million ATMs still see 95.3 billion cash withdrawals annually, totaling over $13 trillion USD. This is the equivalent of around 15 percent of entire global GDP, so whilst cashless payments will likely move to ten times those of cash in the next decade, the importance of cash is still key.

 

 

Giving consumers the options they want

 

Even while cash remains in demand among many consumers, when it comes to banking, digital tools will need to be a top priority, not only when it comes to payments, but in the wider banking sector as a whole.

 

Studies have shown that people tend to be very loyal to their chosen bank, with a 2019 survey revealing almost two-thirds have been with their primary financial institution (FI) for more than five years. However, younger, more digital-savvy customers are more likely to be tempted by alternative providers, so legacy banks must respond to these threats by overhauling their technology solutions.

 

The wariness of many people towards cashless payments will be a key advantage for these FIs, but if their digital tools aren't up to scratch, they may well lose out on younger customers who, if kept loyal, could be customers for a lifetime.

 

The ATM will have a central role to play in this, especially if banks are able to implement the latest technologies that can reimagine this venerable part of their business. Today's Smart ATMs can bridge the gap between physical and digital banking, allowing consumers to manage almost every aspect of their finances from these self-service systems.

 

The future of banking continues to be re-imagined. By offering every customer the option that's most appealing and convenient for them, whether it's digital banking, contactless payments or a continued reliance on cash, banks can put themselves in the best position to reimagine their services and thrive in the new, digital-first era.

Colin Gordon

Financial Services SelfServ, Marketing Manager

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Colin Gordon is a Global ATM Marketing Manager based at NCR’s R&D Center in Dundee, Scotland. Colin is responsible for the marketing of NCR’s financial hardware portfolio with a specific focus on activities such as demand generation, sales enablement, market analysis and customer engagements for the ATM business.