By : Colin Gordon
Banks play a big part in influencing and shaping consumer trends in the financial services industry, but it's also important for financial institutions (FIs) to be in tune with what people want and to respond accordingly.
Whilst there are ongoing changes in the choices consumers have in digital payments space such as with Apple Pay or contactless, it should be remembered that a large proportion of consumers still want to use cash and rely heavily on ATMs. More importantly, consumers want to have a choice as to how they pay for goods or services and not be forced into one specific channel in what is becoming a fragmented payments landscape.
As FIs look to keep up with the latest trends it is important they do not neglect
those customers who prefer tried-and-tested ways of managing their money.
Is there really a change in cash use?
It is often argued that physical currency is not as common or as necessary as it once was, in large part because
modern-day consumers have so many other ways of paying for things - mobile wallets and contactless cards, for
example. A recent report from Retail Banking Research (RBR) highlighted rapid growth in contactless payments in
markets like the UK, France, the Czech Republic and Poland. It also referred to an initiative by the central bank of
Thailand to reduce cash use. The same report makes clear though that ATM cash withdrawals remain strong, with
the equivalent of over $420,000 USD withdrawn from the world’s 3.1 Million ATMs every single second. A number
that is expected to increase to past 4 Million by 2021.
Moneris, a credit and debit card processor, predicted that cash purchases will account for only ten percent of
money spent in Canada by 2030, down from 35 percent in 2014. The company said this decline will coincide with
further growth in digital payment technologies, particularly among younger consumers. Contrast that with recent
research by Cardtronics who surveyed over 1000 US consumers in their Health of Cash study. It concluded: “A
healthy payments community is diverse, not cashless, and it should always be defined by consumers having the
freedom to choose convenience, security and privacy based on their preferences. It found that with local retailers,
coffee shops, bars, sports, convenience stores, street fairs cash still most popular payment method. Also 84% of
consumers surveyed always like to keep cash on hand
Such surveys and trends are published almost daily now, but they don't diminish the fact that cash actually
remains an extremely important and uniquely beneficial form of payment. Australia's new $5 note for example,
which has specially designed tactile features for blind people, is a perfect example of how cash can offer
advantages that other payment methods can't. The Bank of England’s new polymer £5 note has also had
significant amounts of media attention after its recent launch.
It's also important to recognize that a cashless society could come with problems of its own. In an article for
Bloomberg, Elaine Ou, blockchain engineer at Global Financial Access and a former lecturer at the University of
Sydney, said one of the most important aspects of physical money is the fact that it has a current and immediate
value - hence the name currency. An account balance, on the other hand, is "not actually money, but a claim on
money", she noted.
Ms Ou also claimed that the crime-fighting case against cash is "overstated" and argued that "a cashless economy
violates the basic laws under which currency has operated since before the Industrial Revolution".
What does all this mean for ATM technology?
It's clear that cash, isn't going to disappear anytime soon, so the ATM will continue to play an extremely important
role in how banks interact with consumers and deliver services. One of the key goals for FIs in managing and
planning investment in this channel should be to engage with people to find out what they want, rather than
basing decisions on wider trends that may have little relevance to your loyal customers. Dedicated cash supply
management solutions could also deliver big benefits when it comes to ensuring that your ATMs are properly
stocked to meet demand.
Furthermore, it's important to acknowledge that modern ATMs do more than simply dispense cash. They can be a
The Reserve Bank of India has recently launched a drive to effectively repurpose ATMs as bank branches, showing
just how valuable this channel can be to help the underbanked. The ATM is often the first point of contact
consumers have with their bank. In summary, not only are ATMs and cash here to stay for the foreseeable future,
but they have the potential to make some major contributions to social progress payments choice and financial
inclusion in the years to come.