Most of the narrative within the fintech and crypto space revolves around the decline of cash. But is cash really declining? Countries that have attempted to go cashless, such as Sweden, have backtracked these efforts to ensure that consumers still have access to cash when the occasion calls for it.
“Cash is on the increase,” said Joe Myers, Executive Vice President of Global Banking at Diebold Nixdorf. “If you look at global cash in the economy since 2012, there’s a compound annual growth rate of about 7.5%. So cash is growing. That was one of the things that struck me as an ‘aha’ moment. Consumers need access to cash. And that has a direct correlation on how that all plays through in the ecosystem, including access to technology like ATMs.”
Diebold Nixdorf, a multinational company that specializes in self-service transaction systems such as automated teller machines (ATMs), has supported this need for cash for consumers. There is a need for more ATMs now more than ever as more bank branch networks are beginning to shrink.
Myers added, “Diebold Nixdorf sits in a very interesting place, connecting the physical to the digital and still allowing access to cash for those that need it. The ATM market is in good shape. We have tremendously strong products and global market share.”
“You can’t argue with cash, that’s for sure,” said Brian Riley, Director of Credit Advisory Service at Mercator Advisory Group. “The ATM has become more than a money machine. There are other functionalities to it. Even as electronic payments start growing, there’s definitely a use case for these machines to displace the operational expenses associated with the branch.
Although it is not a worrisome rate, banks are beginning to close more branches, something that should remain top of mind. As banks aim to reduce costs, the increased use of technology will be critical to continue to deliver a top customer experience.
“Functionality and technology are playing a bigger role,” said Myers. “The rate of decline is there for banks, at about 1% per annum. It’s not huge but certainly happening. The functionality that technology is putting forward so that people still have access to services is critical.”
Addressing Customer Pain Points
Every industry struggles to remain competitive and solvent, and the banking industry is no different. Myers has taken the time to get on the ground to hear firsthand what banks are struggling with.
“The one thing that is common across all is there isn’t a CEO at any of these banks that isn’t looking to improve their efficiency ratio,” said Myers. “Improving their efficiency ratio means attracting new customers and generating new income and new fees from those customers. Number two is retaining those customers that they have and enabling cross-sell and upsell into those customers — again, driving additional revenue sources from those customers. Thirdly, reducing the cost at which they do it. Reducing the amount of staff in branch and relying more heavily on technology.”
Fintechs are winning over consumers with fast, secure, and affordable ways to get access to financial services. The winning edge these fintechs have is that they don’t have the operational costs of branches, allowing these companies to be nimbler with their solutions.
Consumers are also looking for a streamlined, seamless customer journey. “When we think about the journeys that are being created and how the app and the web, and the physical assets like the ATM, branch, and advisory services are all having to work very closely together to create a seamless experience,” said Myers, “that’s how banks are differentiating themselves from each other, and how they’re looking to win market share in what is a very competitive marketplace. That is what we are picking up from our markets and where we currently stand in terms of how we are positioned to help support them and create those journeys that best enable them to attract and retain new customers in a cost-effective way.”
“This kind of symbiotic relationship between ATMs and branches and payments, it creates an ecosystem where you know that the card must have wide acceptance,” said Riley. “The financial institution has their own branding that can be done with that. They can tie it into the branch, they can tie it into the card. There’s a whole continuous loop that I see.”
On another note, despite the push toward digital currency and transactions, banks need to remember that in parts of the world, cash is still king. “Sweden declared that they would be a cashless society 15 years ago,” said Myers. “They’ve had to reverse that and reposition [to] what is a cash-light society. There’s regulation that’s coming to place that every single member of the Swedish population has to be within 25 kilometers of an access point to cash. That’s a great proof point for the rest of the world to start to think about as they think about this migration to a cash-light society. It’s critical that availability to cash is maintained across the entire ecosystem to allow that resiliency, should disaster occur.”
Positioned to Deliver Solutions
There is no doubt that in order for banks to continually deliver a seamless customer journey, their current systems must be modernized. Legacy systems can be cumbersome to deal with when it comes to making quick changes or to develop on. It is also much more costly.
“At Diebold, we’ve created a set of micro services that we have deployed across a number of key banks that enable them to quickly make the changes required to comply with whatever regulatory changes take place,” said Myers. “To capture the data they need, store it, and create a customer journey to attract and retain more customers. This is all in a cost-effective way. We have a consulting team ready to talk to bankers to showcase what Diebold Nixdorf can do.”
Banks can be sure that a partnership with Diebold Nixdorf can put them on the right path to delivering a top-notch customer experience.
“We have service techs across the world ensuring that those systems are up and running as close to 100% of the time as possible, “said Myers. “With our software, we are making sure that we are validating transactions along with security. With marketing, banks can present offers via technology as opposed to in-person. We’re moving customers into a more personalized area, where bankers can advise and create additional value for their customers, leading to additional fee income as banks are able to sell more complex solutions.
“When I think of Diebold Nixdorf, I think of ATMs, but an ATM is a commodity piece for a financial institution,” said Riley. “The special sauce is being able to customize it to that financial institution.”
Another technology that’s generating a lot of interest, especially in the U.S., is the interactive video teller (IVT), or having a video teller at an ATM or a remote branch.
“There’s a massive runway to get into video,” said Myers. “Video via teller at the ATM, via a remote-type branch. Video is a big thing and something we have the capability to share.”
“I’ve seen it with two big money center banks,” said Riley. “And I recently had to open a credit union account for a client and it was actually a good experience because I’m used to top banks. I was surprised how they had integrated the IVT into the whole transaction. With the push of a button, I can be dealing with a rep, I choose the denomination of funds, I’ve also seen it with a couple of big banks using it to displace closed branches.”
“That technology is being deployed to maintain the personal touch and ensure that the customer journey and the support required by that customer is available at the push of a button,” said Myers. “That results in major efficiency for the bank because they are not having to staff multiple banks, especially those that seldom get foot traffic.”
Finally, all banks must make it a priority to stay solvent and competitive by ensuring the safety and accessibility of cash for their customers.
“Security is a major part,” added Myers. “Securing the ATM, securing the cash within the ATM. The other key bit here is availability. Making sure their solution is available to customers. Our services and our services techs ensure that our fleet of ATMs are continuously up, striving to get to 100%. This technology is really forward-thinking and AI-driven. What it tells us and tells our techs is that when one of the systems are about to go down, so we can perform preventative maintenance to ensure the uptime remains.”