With 60 ATMs per 100 000 population, South Africa ranks 46th in the world for distribution of cash machines. South Korea can claim pride of place as the most ATM dense country with 282 ATM’s per 100 000. Canada and Portugal claim second and third place.
Africa, the continent with the lowest number of cash dispensers, has had to optimise alternatives such as mobile banking. We can boast the highest activity in the world. But, in many other parts of the world cash is still king.
Heard of the banknote paradox? The Bank of England reports that the gap between transactional cash use, and the banknotes in circulation, has widened significantly during virus-time. Although not yet properly researched, the speculation is that people – for obvious reasons – are avoiding cash handling and are resorting to mobile and e-banking services. But conversely, concerns about the stability of banks and the economy are compelling people to keep large banknotes on hand in case of a crisis. Lower interest rates and levels of inflation have also lowered the opportunity costs of holding cash.
First world statistics are showing that around 90% of cash is now acquired from ATMs. People are reluctant to queue in branches. And, given the facts above, it seems as though they are bizarrely storing the money under their matrasses.
Travel restrictions have also had a significant impact on the cash landscape. London, one of the world’s most visited cities, has seen cash withdrawals fall by as much as 80% during April and September 2020. So, cash forecasts seem to be anyone’s guess at present. Financial institutions can no longer rely on historical data to predict their cash requirements. In countries such as India, mobile ATMs on are now big deals on wheels. And we predict that drive-up ATMs will soon sprout up all over our cities.
In the meantime, many commercial enterprises have reduced cash deposits which affects cash availability. It is likely that only banks with sophisticated cash management and recycling tools will be able to fulfil their customer demands. The cash supply shortage has further been exacerbated by a reduction in bank opening hours and the temporary closing of branches. An unexpected benefit to consumers was that some service providers have waived charges for cash withdrawals in order to stimulate transactions and economic activity.
ATMs not only provide us with cash, they are also convenient points for wider banking services. With reports of reduced transaction frequency but higher withdrawal limits, client behaviour may well have changed forever – which brings us back to a focus on self-service, contactless payments. Where is the sense in tapping a credit card machine and then getting your hands dirty by having to physically enter your pin code? Iris scanning to the rescue? First movers with excellent first line maintenance will no doubt win the race to the new finish line. Businesses need to ensure that self-service tech is available and fully functional 24/7.
In the meantime, cash suppliers have not quite worked out how to guarantee that users have full protection from cash handling. The jury is still out on the best ways to sanitise notes prior to them being inserted into dispensers.
As much as we are aware of how dependent we have become on internet banking, in many parts of the world cash is still king. Even in first world countries, cappuccino withdrawal and habit make us want to have cash in our back pockets. But we predict that no-touch service providers of low-value, contactless payments will soon rule the roost.
Altron Managed Solutions
Altron Campus, 20 Woodlands, Woodlands Drive,
Woodlands Office Park, Woodmead
PO Box 3591, Johannesburg, 2000, South Africa
+27 (11) 373 4000