The use of coin dates back over 2,500 years, and in an industry that old, it can be difficult to do anything genuinely ‘new’. Hence the excitement when NatWest hosted what’s believed to be the first ever cash hackathon at their London HQ in late November, with attendees from a range of industries, to innovate on future payment methods, and reimagine the future of cash.
This article is a summary of that hackathon from organiser Gerard O’Hanlon, Strategy Manager for Cash and Self Service at NatWest. While the event had a UK-specific focus, it addressed problems that can be seen globally. Many participants in the UK cash ecosystem are considering the best ways to support cash users and maintain access to cash as many consumers and businesses transition towards digital alternatives.
New research by NatWest shows a continued decline in cash use with four in ten (39%) using cash less than they did in 2022. Vulnerable consumers continue to use cash more than others, with six in ten (62%) saying they use cash most or all of the time compared with only half (54%) of the general population. Despite this, they are becoming increasingly comfortable with digital payment methods.
One third (37%) of vulnerable customers use less cash now than in 2022, with the most popular reason for this change being increased comfort with digital forms of payment.
However, the research also revealed that several groups of consumers are reporting a reliance on cash where they previously did not. Those claiming to be significantly inconvenienced or worse without cash rose by a fifth (20%), showing progress in being comfortable with these alternatives cannot be taken for granted.
Although people are becoming increasingly prepared to adopt digital payment methods, many still rely on cash in certain contexts. If financial institutions expect these cash users to make more use of apps and cards, then the digital alternatives offered need to be customer-led and address the legitimate use-cases that continue to drive the ongoing prominence of cash for these use cases.
Despite this, many groups use cash for reasons that will prove difficult to address through digital innovation, with cash increasingly operating as more than just a payment tool.
Many respondents continue to use cash for reasons that go beyond just the transactional, with one third (36%) of regular cash users saying they want to ‘keep cash alive’. Even more people use cash as a back-up for when their preferred methods suffer an outage, with more than three quarters (76%) who favour digital payments still carrying cash for emergencies.
As digital solutions improve their ability to replicate the advantages of cash, the industry still needs to support ongoing cash use in a lower volume environment. Cash remains important for many, and the people who use it and the ways in which it is used will continue to evolve.
This evolution presents the cash industry with two key challenges:
1. The need to better understand, and therefore better serve, cash users who are increasingly comfortable with digital adoption but who still rely on cash in certain contexts.
2. The need to build cash infrastructure that caters for reduced or intermittent geographically dispersed demand while remaining safe, convenient and cost-effective.
These challenges require collaboration between the payments industry and consumers. Aware of these evolving payment methods, NatWest invited those retailers still seeing significant cash payments to innovate on the future of payment methods, with specific reference to cash usage.
120 attendees representing 30 different organisations attended the event, hosted at NatWest’s London Conference Centre. Representatives from 10 different business areas at NatWest were joined by cash industry partners like LINK, De La Rue and Vaultex, cash-in-transit specialists like G4S and Loomis, payment innovators including Paysafe and Baringa,
technical specialists including IBM, TCS and Infosys, and customers of varying size including Tesco, Lidl and smaller retailers. Proceedings were observed by representatives from the Bank of England and a host of industry experts.
The day began with a briefing on the latest insights and an expert panel discussion – where prominent customer advocates and payments strategists gave their own analysis.
Thereafter, teams spent three and a half hours guided by moderators from Accenture’s innovation team to create solutions to the key challenges facing cash-users today, with half of the teams working to create digital solutions that better meet the needs of cash users and the other half addressing the need for sustainable cash infrastructure.
12 teams presented their ideas to a judging team that included NatWest’s Chief Payments Officer, Mark Brant, and the Chair of Cash Access UK, Natalie Ceeney, with a mixed team from Loomis and NatWest crowned winners on the day.
Key themes emerged from the various pitches giving a clear indication of the direction of travel for the industry.
To build digital solutions that truly meet the needs of all consumers, teams focused heavily on replicating intuitive visualisations of customer balances.
Several teams identified that the tangibility of cash makes it easier for consumers to track expenditure and to identify quickly if they are running low on funds. Attempts to replicate this in a digital context manifested in a variety of ways, with suggestions ranging from balance notifications at the point of purchase (but before the payment takes place) to widgets for phones or cards that display a user’s balance in pictorial form (perhaps as a pile of coins) complete with real-time depletion as the user spends. Other ideas involved gamification for financial upskilling – ‘like Duolingo for money’ – and increasing friction in transactions, where appropriate, to prevent the kind of overspending that some consumers say digital payments may facilitate.
Meanwhile, other teams considered how cash infrastructure can better balance commercial sustainability with customer needs at lower volumes.
Teams emphasised collaboration opportunities with other industries, particularly retailers, to locate cash access solutions in spaces that will see sustained footfall (and cash payments) in future. Several teams were attentive to the need for access to cash and bespoke solutions tailored to individual communities, with safety and security, convenience and speed of service all identified as best serving customers.
Agile, automated infrastructure was repeatedly deemed to be an area of development that could evolve and meet the needs of cash users, over and above traditional counter-top services that have characterised cash management to date.
This event has demonstrated the value of bringing experts together to explore the future of cash and payments technology. The learnings from the day will shape NatWest’s strategy in this space and have reinforced an existing desire for further conversations with industry partners who are well-placed to meet the needs of cash users as they continue to evolve.
There are certainly still chapters to be written in the storied history of physical cash, and the outputs from this unprecedented gathering suggest that innovators, in both the digital and physical domains, can yet shape and secure the future of payments if they commit themselves to customer-led design that addresses the varied and complex needs of cash users, in the UK and elsewhere.
