2. European research
5 years tracking the state of cash
Future of Cash 2016
2011 2013 2016 “European Cash Report”“Future
Scenario”
Report
Netherlands
3. Future of Cash 2016
Why undertake The European Cash Study?
Role of cash in
a changing
landscape
What makes cash
special (or not)
Range of cash
cycles across
Europe
Cross-country
trends
Encourage dialogue
Promote supply chain collaboration
Understand & share
4. Future of Cash 2016
Cash report structure
1. EU Trends, Objectives & Key Themes
2. EU Statistics
3. Cross Country Comparisons
4. Observations
5. Future Scenarios
6. Key findings & Closing remarks
7. 28 Country Pages
28 EU countries Report Format
5. Future of Cash 2016
Cash is growing
ATM withdrawals and CIC
Electronic payments are
growing faster
New payment methods
and new ways to buy
A multi-pace Europe,
with faster expectations
The State of Cash in Europe
Key Findings
6. Future of Cash 2016
But there has been a
paradigm shift in thinking
FROM
“Cash will disappear…
it has a definite
Shelf Life”
TO
“Cash will remain:
Europe cannot do
without cash”
“Cashless” “Less-Cash”
7. Future of Cash 2016
The volume of cash
transactions is increasing
8. Future of Cash 2016
But Access is Shrinking
Bank Branches Declining ATM deployment flat (2014 = France only)
9. Future of Cash 2016
Proportion of non-cash
payments is increasing
10. Future of Cash 2016
Yet cash remains predominant
60% Of all payment
transactions
in Europe are cash
11. Future of Cash 2016
A two-speed cash Europe?
60% of all payments
are in cash
20 out of 28 countries:
50% of all payments are in cash
26 out of 28 countries: cash largest
payment instrument in volume
12. Future of Cash 2016
A mixed payment Europe
Cash payments <50%
Cash payments 50% - 60%
Cash payments 70-80%
Cash payments 80-90%
Cash payments >90%
13. Future of Cash 2016
The drivers of change
Economy &
Geography
Competition
History and
culture
Regulation and
government
Existing
infrastructure
Broadband and
mobile penetration
14. Future of Cash 2016
Cash trends
• Shrinking NCB footprint / physical
involvement - delegation to
commercial banks
• Consolidation of retail banking
infrastructure
Despite the multiple national factors…
• Investment in self-service
cash transactions
• Increasing Interest in limiting use of
high denomination banknotes &/or
high value cash transactions
16. Future of Cash 2016
A social role for cash
“The banks have been too quick to reduce
cash handling. ………….
….If the banks continue to set the pace, there
is a high risk that the possibility of using cash
will disappear before alternative means of
payment have become widespread and
generally accepted.
To restrain this development, the Riksdag
(the Swedish parliament) should introduce a
clear obligation for the banks to provide basic
functions that meet customers’ needs.”
17. Future of Cash 2016
The world cannot
do without cash...
Butwe do need
to talk about it
18. Future of Cash 2016
The cash cycle is too inefficient
The cash cycle needs
modernising,
simplifying and
streamlining
Fragmented
Bottlenecks
Movement
Late realisation
19. Future of Cash 2016
A manifesto
for cash
Shorten the cash cycle?
Realise earlier value?
Reduce the cost of cash?
Create a better multipayment interface?
How can we…
20. Future of Cash 2016
A G4S contribution: Modernising cash
through technology
Introduction
Thanks for the invitation to speak at the 2016 Future of Cash conference
Great to be here in Paris discussing some of the most important issues for our payments infrastructure with leaders and captains of industry
G4S has been at the forefront of managing Europe’s cash for x years.
We move €x billion each day, across x countries, employing 623,000 people in Europe.
We work with x of Europe’s 10 largest financial institutions and thousands of businesses across the continent
We operate in 20 of 28 EU countries and globally in 110 countries
Breadth of cash services
Forecasting
Wholesale & retail logistics
Wholesale & retail processing
ATM Estate management
Device engineering
End-to-End Supply Chain solutions
Cash Management Outsourcing for Financial Institutions
We believe the depth of our cash service offering, and geographic footprint, gives us a unique insight into how cash payments are evolving globally.
We recognised some years ago that the discussion over the future of cash was becoming polarised between those who saw the demise of cash as imminent and inevitable and a “no change” alternative view. We felt that a real debate was required based upon objective evidence and in 2011 published our first national Cash Report, covering the Netherlands. This was well received by the stakeholders and so in 2013 we undertook a similar study in Belgium.
Today I am delighted to announce the publication of our European Cash Report that examines in detail the cash cycles and cash payment trends at a Pan-European level covering all 28 EU Member States. Today G4S publishes the first pan-European Cash Report that examines cash payments within the context of the cash cycle of each of the 28 EU Member States:Pan European trends & developments supported by stakeholder interviews (ECB, EC, EPC, EU Retailer and Consumer bodies, ESTA).
The G4S European Cash Report is based upon both primary and secondary research and I would like to sincerely thank the European institutions and organisations who have kindly supported this initiative.
As I mentioned, we wanted the G4S Cash Report to be objective and to answer some questions such as…
What is the current role of cash?
Why is it special?….if it is?
How varied are the cash cycles across the Member States and are there trends and lessons to be understood and shared?
….because fundamentally we want to make cash fit for the 21st century, and we would like to engage from today with all the stakeholders in the cash cycle to ensure that cash meets the needs of consumers and businesses in the new multi-payments landscape.
The European Cash Report is intended to provide a comprehensive view and is based upon 2015 research. It covers the topics outlined on this slide and covers each country in the same depth: it is not simply a promotional tool for G4S in those markets that we operate. Research undertaken in 2015.
Scope 28 EU Countries: Austria, Germany, Poland, Belgium, Greece, Portugal, Bulgaria, Hungary, Romania, Croatia, Ireland, Slovakia, Cyprus, Italy, Slovenia, Czech Republic, Latvia, Spain, Denmark, Lithuania, Sweden, Estonia, Luxembourg, United Kingdom, Finland, Malta, France, Netherlands
I genuinely hope it will be as interesting and useful to a stakeholder here in France where we do not have cash operations, as in those territories on the map I showed you earlier.
So let me give you some quick insights from the Cash Report…
We all know that it is very difficult to measure cash usage. But the fact is that cash usage is growing at a European level – not just cash in circulation which is affected by hoarding and other factors, but cash withdrawals from ATMs are consistently growing which is a much better proxy for transactional cash usage.
But then so are all payments and electronic payments are growing faster than cash.
The “way we pay” is changing. We have much greater choice. Sometimes a bewildering choice as new payment products are launched and sometimes die, sometimes canabalise another form of non-cash payments, and sometimes substitute for cash.
While of course “the way we shop” is changing fast too – with a shift from “bricks-to-clicks” as new retail entrants and existing suppliers exploit the opportunity of internet based sale.
However, despite the growth in cash usage, the access points for cash by consumers are shrinking. ATM deployment is essentially static and commercial banks are facing their own “clicks-versus-bricks” dilemma and consolidating their physical branch networks.
Finally we should recognise that the internet has made us very “impatient consumers”. We expect things to be fulfilled with “Amazon Speed”. And that impatience applies to payments: consumers and businesses expect faster settlement.
So while countries may differ on their approach and timing one thing is clear: we need to modernise cash. We need 21st Century cash.
I would however note one very definite change. As I mentioned earlier, several years ago the cash debate was polarised between “cashless soon” and “business as usual”. Those who advocated cashless were vociferous and influential.
In our experience this has changed. Stakeholders and serious commentators no longer predict a cashless future any time soon. Instead it is much more about “the world will continue to need cash”. In other words we are moving towards a less-cash world rather than a cashless one.
Here is the evidence I talked about – ATM withdrawals across the EU are consistently increasing. Similarly, the volume and value of cash in circulation across the EU continues to increase. Here are some facts to consider.
The value for ATM withdrawals, a proxy for cash payments, has risen by 14.63% between 2009 and 2014 - a €2188m increase
In the past 13 years the value of cash in circulation has increased 13% per annum and the volume by 11%.
Since 2009 the value of cash as a % of GDP has grown from 7,6% in 2009 to 8,2% in 2014
And yet, as we said, despite the growth in cash usage – access to cash for consumers is falling. Bank branch numbers are falling and ATM growth is flat. I should note that the huge uplift in ATMs shown in 2014 is down to one country – here in France, which deployed XXX ATMs in 2014.
Whilst the volume and value of cash transactions rises, the relative share of transactions made up by non-cash alternatives is rising faster.
Across Europe non-cash payments – cards, electronic payments like direct debits, and digital payments – now account for 40% of all transactions. Some further figures to consider:
Cards, credit transfers and direct debits account for the vast majority of these transactions- 94%
The total volume of non-cash payments has increased to 103.2 bn transactions – 4.3% year-on-year growth since 2009
The growth in card payments has contributed most strongly to this – with the volume of transactions by cards having increased over 50% in the same period
Nevertheless cash overall, represents 60% of all payment transactions across the EU. It is still the dominant payment mechanism.
In eight of the 28 countries we examined cash use was lower than half.
Yet in the other 20 cash transactions as a proportion of all payments remained above 50%, well above, in many cases.
And here is how it breaks down by country….
We are looking at a Europe with an increasingly diverse payment mix. Cash use and, by the same virtue, non-cash payments, across the 28 EU countries we surveyed varies significantly.
At one end of the spectrum we have Greece (97%) and Balkan countries like Bulgaria (95%) and Romania (93%).
At the other are Northern European countries with much lower levels of cash use: Netherlands (37%), Denmark (37%), Sweden (38%)
Payment transactions in Northern Europe generally tend to be less likely to be in cash than Southern Europe, although there are even exceptions to this
What drivers shape consumers’ choice of payments and therefore the use of cash is complex and often country specific.
Take Greece as an example: a country with 95% cash use where trust in financial institutions is at an all time low.
Or the UK, which has the highest rates of e-commerce transactions in Europe.
These factors include, but aren’t limited to:
The maturity of the electronic payment infrastructure in the country
Economic situation/stability of the country
Level of trust in the financial system
Development of electronic commerce & digitalisation
Level of GDP
Rules & Regulations influencing the use of cash/non-cash
Social & Financial Inclusion
One thing we believe: there are around 13 preferred attributes for payment methods.
Not one payment method has all, but some, including cash have more than others.
We are looking at a Europe with an increasingly diverse payment mix. Cash use and, by the same virtue, non-cash payments, across the 28 EU countries we surveyed varies significantly.
At one end of the spectrum we have Greece (97%) and Balkan countries like Bulgaria (95%) and Romania (93%).
At the other are Northern European countries with much lower levels of cash use: Netherlands (37%), Denmark (37%), Sweden (38%)
Payment transactions in Northern Europe generally tend to be less likely to be in cash than Southern Europe, although there are even exceptions to this
So why do the people who think high value cash transactions should be restricted also believe that a cashless society is a fantasy? Why does “the world need cash”? The answer is that cash provides many of the features that consumers most value in a payment instrument….
Cash is trusted as State issued legal tender
Cash is accessible and tangible
Cash retains anonymity
Cash offers a direct settlement
It will be a time before non-cash payment mechanisms adopt the same valued attributes.
As long as the unique attributes of cash are not fulfilled by electronic methods, cash will remain a prevalent payment tool across the EU
Clearly there are social and cultural effects that influence cash usage by the public. It would also seem that, given the recent statements by the Riksbank, that regulators are recognising that there are limits to how acceptable enforced change can be. In addition to cash’s important societal role, it is also important to recognise that cash has a critical contingency function in the economy: it is State backed money that does not depend upon an electronic infrastructure to function. This can be vital in a crisis or in the event of system failure
Sweden is often cited as the most likely country to go cashless. It would seem that its Central Bank believes Swedish society is not ready, or capable of enduring, an imposed cashless solution.
A regulatory back-stop is one thing. But nevertheless we need to recognise that cash needs to modernise to ensure its place as a medium of choice in a mixed payments economy
Consumers are continuing to use cash, but it needs to be cost competitive for retailers and banks to want to accept and issue cash. A modernised efficient cash cycle and faster settlement for cash transactions will ensure that cash remains attractive to these businesses as well as to those consumers who want to use it.
The truth is that the current cash cycle is inefficient.
Its too fragmented: we all understand that every time cash is passed from one party to another the receiver will want to count it. In an extreme example that means that the same cash could be counted up to 17 times. That’s not irrational – it is a structural failing that should be addressed by streamlining the cycle.
That would also enable the bottlenecks that slow the cycle to be removed.
There is too much movement of cash. We need to recirculate validated, fit cash as close to source and demand as possible.
And …as I stated earlier – we are all impatient, whether as individuals or businesses. We want our cash to work for us, and that means we when we put it into a bank account we want to access the credit immediately.
These costs and inefficiencies could be minimised and cash made more efficient through root and branch reform of the cash cycle.
A regulatory back-stop is one thing. But nevertheless we need to recognise that cash needs to modernise to ensure its place as a medium of choice in a mixed payments economy
Consumers are continuing to use cash, but it needs to be cost competitive for retailers and banks to want to accept and issue cash. A modernised efficient cash cycle and faster settlement for cash transactions will ensure that cash remains attractive to these businesses as well as to those consumers who want to use it.
Finally I want to end with a note on how we have begun this journey through investment in R&D.
Two years of research and development resulted in the launch of CASH360™, the unique end-to-end cash management solution that makes cash work harder for businesses, safer for their employees, and better for customers. Today over 3,500 organisations in four continents and across diverse market sectors make use of CASH360™.
In the past financial year we have worked with one of the US’s largest retailers, streamlining their cash to bank cycle and ensuring early value. I’m pleased to say that, so far, this approach couple with Cash 360 technology has resulted in some $500m savings.
We don’t have all the answers. But highlighting and sharing best practice is how we’re going to modernise cash.
