As noted in the summary of the recent Emerging Market and Europe ATM and Cash Summit in Dublin, the focus was on understanding the future of ATMs in a changing cash environment. As such there was a strong ‘Future of Cash’ feel to the agenda alongside more technical ATM perspectives and topics. Perhaps some of the audience should be in Istanbul at the Future of Cash conference 6-8 November!
This edition of Cash & Payment News™ covers much of the seminar in detail because the collective voice of the ATM industry is seldom heard, and ATMs are critical infrastructure for the cash cycle. Stakeholders in the cash cycle need to understand the perspective, challenges and capabilities of the ATM industry.
The Less Cash Challenge
Several presentations explained clearly the less cash challenge in many parts of Europe. It told an interesting story with the Netherlands, the UK and the ECB all focused on maintaining access to cash and Sweden struggling to rebuild cash infrastructure.
Bancomat’s comment that it is easier to ‘preserve’ than rebuild came across powerfully and there is a message here for the seven emerging market economies discussed by LINK who are currently actively trying to reduce their cash usage. Sweden has had to resort to legislation and active participation in the cash cycle to safeguard cash.
The UK has legislated for access to cash and has an advanced and increasingly successful programme of supporting ATMs, addressing bank branch deserts and requiring cash infrastructure to be maintained. But the government will not legislate for acceptance despite good quality data that shows this is now a significant UK challenge.
The Netherlands led with a Cash Covenant approach having established in 2018 that its campaign to increase digital payments had had unforeseen consequences. While the Covenant has delayed the decline in cash infrastructure, the Ministry of Finance has now started the process of introducing legislation because cash infrastructure is not being maintained to the required level despite the Covenant.
The ECB operates in a more complex arena working with the European Commission and with the 20 National Central Banks in the Eurosystem. It too has identified the need to clarify the legal tender status of cash and to take active steps to safeguard access and acceptance.
The changing role of ATMs
ECB research identified just how important ATMs are for access to cash. While Geldmaat made the case for banks combining ATM networks in a utility model, Brinks argued that scale is all and that if banks outsourced their ATMs significant operational savings could be reduced and risks mitigated. The rise of Independent ATM deployers is another route to maintaining ATM footprints.
The presentations also highlighted how ATMs are changing. Change always brings new opportunities and there was a sense at the summit that while some of these are being grasped by the industry, there may be other opportunities to create new ways forward.
Obvious changes include the need for recycling ATMs, which can accept deposits as well as issue cash, and, following reductions in bank branches, the remaining branches are becoming fully automated for cash services, there is an increase in ATMs linked to video banking, and new shared banking hubs, also with automated cash services.
In all of this, banks need to think through that ATMs will, where branches have closed, become the sole visible footprint of banks on the high street.
Technology is also bringing opportunities. Contactless cash withdrawals and other ATM interactions are coming using QR codes and PIN numbers send by one time SMS messages. The Internet of Things, cloud computing and new standards are creating new, secure innovation options. New opportunities may also be coming from the break between financial transactions and bank accounts. Fintech companies are creating payment solutions that are separate from traditional bank accounts.
CBDCs and, to a lesser extent, stablecoins and cryptocurrencies, may be on their way as mainstream payment tools. Whether for offline payments, resilience or financial inclusion, how can ATMs be part of that story offering real benefits? Theoretical today, but time to plan now.
Governments are increasingly aware of the need for resilience in payment systems, the need to support the financially excluded and the disruption of the withdrawal from banks on the high street.
Cash circulation produces a significant part of the environmental impact of the cash cycle. Working with government on recirculation policies, with retailers and banks on Smartsafes and CITs on data management are examples of rethinking cash to have a lower impact. There is scope to change the model and how cash circulates.
While it is easy to be feel that we are on the downward curve of history, this summit demonstrated that there are real opportunities for the ATM industry to build on its current vital role in societies.