The next few years will be decisive in determining what payments and financial services will look like for decades to come.
Driving this is a huge change in the way people manage their money – something that affects all of us as we go about our daily lives. The pace of change is only set to increase, with the merits of advances in related technology, from cryptocurrencies to biometrics, likely to be fiercely debated on all sides.
While the popular theory says that the the verge of becoming a cashless society, I would politely remind the soothsayers about the hype surrounding Concorde in the 1970s. Supersonic travel was set to displace everything else. Subsequent events simply confirm that divining the future by no means an exact science.
Today, cash remains the most commonly used form of consumer payments by far. According to Payments UK, British consumers make around half of their transactions in cash, with the other half divided between debit and credit cards, mobile payments like Apple Pay, and cheques, among many others. Consumer choice is rightly driving the expansion of the payments mix, but the truth is that, no matter what exaggerated headlines we read, people will continue to choose cash for decades to come – something that any serious commentator will confirm.
With the digital revolution advancing remorselessly into financial services and payment technology, banks are seemingly being forced to decrease the number of branches available to their customers. Britain’s already hard-pressed rural and urban villages lost over 1,000 branches between 2015 and 2016 alone. However, just as cash will continue to be a cornerstone of our payments mix, digital banking will never be able to fully replace the need for the physical touchpoints previously provided by banks in local communities. The importance of access to convenient self-service options is rapidly increasing, demonstrated by the accelerating roll-out of ATMs in the UK – recently breaching the 70,000 mark for the first time.
With more and more services becoming available through ATMs, and an increasing number of payment methods introduced into the mix, the financial services ecosystem is unrecognisable from fifty years ago, when the first ATM was installed in North London. The uniquely diverse agenda for our upcoming ATM and payments industry gathering is proof that banks, and the increasingly important independent providers of financial services, face some tough decisions about the mix between their physical and digital channels.
Could ATMs be the last physical touchpoints for financial services left in local communities, as bank branches close forever? Will groupings of Smart ATMs become the new focal points, the financial services hubs, of “bank-starved” neighbourhoods? Is this the route to true financial inclusion for all?
After years of stagnation, an unprecedented drive for innovation has seen us reach a tipping point in the way we manage our finances. Decisions taken today will define our everyday interactions with money for decades to come. So-called disrupters are introducing new ways of banking, which is giving consumers greater choice. But all signs point to a resilient demand for cash and ATMs, as two major pillars of the future payments and banking mix.
Ron Delnevo is executive director Europe of the ATM Industry Association. The “ATM and Cash Innovation Europe” event takes place in London, 13 – 14 June.