Cashless SocietyThe challenge of convincing consumers to abandon cashWhilst on the one hand there exists an inexorable momentum encouraging consumers to use cash less and less – self service checkouts, contactless card technology, payment via mobile etc – the vast bulk of the British population is far from embracing a cashless existence.The momentum behind a cashless society is driven particularly by retailers and financial institutions, including high street banks. Self service checkouts and contactless payment options from retailers and bank cards that offer more sophisticated payment options, along with related promotional advertising from financial companies, are nudging consumers towards moving away from using cash.The benefits to trade of a cashless society and the job to be done to achieve thisHandling less cash offers huge efficiencies for various kinds of businesses, but retailers and financial companies in particular. The less cash that passes through their books, the quicker, more secure and less expensive their processes become.However, despite all of the nudging that has been going on, new findings from Kantar Media TGI reveal that over 90% of consumers in Britain still have at least some concerns about switching away from cash to electronic forms of payment. The reasons for this are multiple, ranging from fears over security, to knowing how much money they have to spend, to simple force of habit.Consumer groups created based on propensity to adopt a cashless existenceAnalysts at Kantar Media’s TGI Insights & Integration team have created three distinct groups of consumers, ranging from those who have already readily embraced a largely cashless existence - the Cashless Converts - to those who have taken first steps towards moving away from cash but still have a way to go – Cashless Cautious – to those who still fiercely cling to cash as the default means of payment – the Cashless Concerned. However, in recent years, whilst there has been a trend of consumer numbers away from Cashless Concerned into Cashless Converts, it has been slow to the point of glacial. A significant number of consumers are migrating from being Cashless Concerned to Cashless Cautious, but only a trickle are moving into the Cashless Converts. It seems the tipping point is still some way off. The challenge for the retail and financial services industries is to nudge more consumers into adopting a cashless existence without alienating them as customers.The Cashless Converts group and how to grow itMale skewExamining the Cashless Converts in detail provides insight into how to grow this group. The associated slides reveal that there is a strong male bias amongst Cashless Converts. Thus the retail and financial industries need to make new ways of paying more appealing to female consumers in particular. Much promotion of non-cash means of payment has been undertaken by highlighting the hi-tech technological nature of it (e.g. mobile money transfers and contactless payment), which is more likely to appeal to men (e.g. men are significantly more likely to say they try and keep up with developments in technology). Greater focus on things like the simplicity, security and speed of non-cash payment might be more effective in enticing women to embrace it.High economic and cultural capitalCashless Converts also have a skew towards having high amounts of both economic and cultural capital, which has a major impact on the choices they make. Whilst this makes them a valuable group, in order to encourage adoption amongst consumers as a whole, retailers and financial companies need to make the message work for those with lower capital in both areas and articulate that it is in their interests to move decisively away from using cash. Those with higher cultural and economic capital are likely to be more open minded and comfortable about adopting new ways of paying, especially if they see it as being quicker and simpler. Indeed, consumers with high capital in these areas are almost 50% more likely than the average adult to say they seek to keep up with developments in technology.Middle aged biasHowever, it is not simply the case that the notion of new technology alone is what is appealing to those who are Cashless Converts. A glance at the age profile of this group reveals that in fact it is not the youngest adults (who are keenest on adopting new technology) who are particularly likely to fall within it. Rather, the 35-44 year old age group are especially likely to be Cashless Converts. The reasons for this may be manifold. One reason could be that these older age groups are more likely to have families and particularly hectic lives in general and see anything that makes life simpler and quicker as something to be embraced. Another factor may be that this older age group is more likely to have a greater variety of payment cards and to hold a credit card at all, thus giving them more options when it comes to not using cash. Having more funds in the bank in the first place is another factor. The youngest adults may on the whole be less likely to have as much disposable income and so prefer to keep a firmer eye on their finances by withdrawing money in cash each week so they can see it dwindle as they spend, rather than pay by card and not see the money vanish. Similarly, younger adults may by and large make a lot of smaller payments – snacks from a shop, a pint of beer in a pub etc – for which cash may seem more natural (particularly as some smaller shops and pubs have minimum spend requirements for card payment). The older age group on the other hand may be more likely to be making larger payments for which cash is far less practical, such as the weekly family food shop.
Cashless Cautious are a fairly flat group when it comes to their indices. This is because they make up the majority - 56% - of the population.
It is great that both Waitrose and Sainsbury’s have higher-than-average proportions of Cashless Converts. This fits as Waitrose pioneered self-checkout techniques with portable scanners. Although customers could still pay with cash at the end, this is still symptomatic of an acceptance of new ways of shopping. This suggests that they would indeed be comfortable with a cashless existence.The benefits of these Cashless Converts for Waitrose and Sainsbury’s will include: fewer cash handling costs, faster transaction times meaning increased turnover, reduced queue times and greater security. It also indicates the forward-thinking nature of their shoppers.However, both supermarkets do less well when it comes to the Cashless Cautious and Cashless Concerned groups. This is a worry as Cashless Concerned make up over a third of the British population, and the Cashless Cautious group make up the majority of the population, so these are not groups that either retailer can afford to alienate. They need to strike a balance between these groups to ensure they don’t gain more consumers of one group at the expense of the other. This is something that will need to be practised locally as a one-size-fits-all model won’t work. In some areas, consumers will be more comfortable with cash-friendly payment methods so adopting pro-cashless methods won’t work, and vice versa. It is in the retailer’s interests to keep all groups onside.
The good news for HSBC is they have a higher-than-average proportion of Cashless Converts. This fits as HSBC have a slightly younger demographic profile: they are 78% more likely to be in the TGI Lifestage group ‘Nest Builders’. They are also 89% more likely to have 4 or more credit or debit cards. This would hint at why they are more likely to embrace a cash-free existence.Having more Cashless Converts is good for HSBC as it invariably means more of their customers will use credit cards. Banks get better returns on credit cards than debit cards and even more so if customers get into debt. The benefit for banks of debit cards over cash is that they can track their customers’ purchasing behaviour. Rather than simply knowing how much cash they took out of an ATM, they know exactly how much was spent on what. This could help inform their marketing campaigns, knowing what sort of special offers to send to which customers.So in order to boost Custom from Cashless Converts, HSBC could run campaigns promoting reward schemes, special offers and attractive interest rates. As Cashless Converts have a greater propensity to spend money, it fits that are particularly likely to be swayed by these factors that will bring them money or save them money.
Cashless Society Charts
CASHLESS SOCIETYTGI INSIGHTS
CASHLESS SOCIETYKEY BENEFITSUnderstand how attached your customers are to cashas a payment meansEvaluate likely take up and engagement of new waysfor your customers to make transactionsGain insight into how best to engage with and attractthose who have adopted a largely cashless existenceIdentify and remove obstacles that may be preventingyour target consumers from abandoning cash
CASHLESS SOCIETYWHAT IS IT?Gauge the readiness of Britishpopulation to embrace the concept of acashless societyPopulation divided into groups basedon their propensity to use cash vs newmeans of payment (e.g. contactless)Understand the ‘who, why, how’ ofconsumers in these groups throughtheir attitudinal, media, leisure etcprofilesCombined with TGI’s WHY Codeinsights to highlight what drivesrejection and adoption
CASHLESS SOCIETYINTRODUCING THE GROUPSCASHLESS CONVERTSHighest propensity to usemeans of payment other thancashCASHLESS CAUTIOUSMedium propensity to usemeans of payment other thancashCASHLESS CONCERNEDLowest propensity to usemeans of payment other thancashOpen to cashlesspayments butprefer cashCashlessConcernedUnlikely to usenon-cash meansof paymentEmbrace a cash-free existence
CASHLESS SOCIETYINTRODUCING THE GROUPSStatementCashlessConvertsHighest propensity touse means of paymentother than cashCashlessCautiousMedium propensity touse means of paymentother than cashCashlessConcernedLowest propensity touse means of paymentother than cashShopping online makes my lifeeasier183 [74%] 116 [47%] 35 [14%]I like to pay cash for everything Ibuy14 [6%] 81 [37%] 171 [78%]Have used contactless technology 211 [12%] 98 [6%] 64 [4%]Send money directly to Charity viainternet268 [15%] 106 [6%] 25 [1%]Paid grocery shopping by debit orcredit card132 [90%] 108 [73%] 71 [48%]Total number of credit/debit cardsheld: 4 Or More221 [29%] 104 [14%] 46 [6%]
CASHLESS SOCIETYMETHODOLOGYHundreds of variables scanned in order to identify what was driving cashlesspaymentPropensity algorithm developed to identify different likelihoods of consumers to usecashless payments such as contactless technology etc.Tracking of evolution of customers relationship with cashRespondents given a score and divided into three groups:Groups2013 2012 2011Overallnumbers% ofconsumers% ofconsumers% ofconsumersCashless Converts 4m 8 7 6Cashless Cautious 28m 56 53 50Cashless concerned 18m 35 40 44
High IndexingPurchasing Factors Banks(By Index)CASHLESS CONVERTSPROFILE31%(60)69%(141)Gender Split0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%18-24 25-34 35-44 45-54 55-64 65+Age Split57% areworking full time(151)Social DNA Map*Base: All adults 18+ Source: GB TGI 2013 Q1HPTTotalpopTop Bank Retailers(By Index)131(15%)163(14%)152(9%)High Global CapitalLow Global CapitalCulturalDominatingEconomicDominating* See Social DNA Map Explanation in AppendixFactorVert.%IndexInterest Rates 24% 117Introductory offers 6% 144Telephone/InternetBanking Facilities20% 1601328715780161111168204
CASHLESS CONVERTSPROFILESource: GB TGI 2013 Q1I would be prepared to pay morefor environmentally friendlyproducts130 (33%)With a credit card I can buythe sorts of things I couldn’tnormally afford159 (22%)Shopping online makes mylife easier182 (74%)HIGH INDEXING SUPERMARKETS157 (7%)132 (32%)16% (133)fall into the Shopper ArchetypesConscious Connoisseurs or QualityCrusadersHIGH INDEXING EATERIES215 (11%)174 (20%)Base: All adults 18+
High IndexingPurchasing Factors Banks(By Index)CASHLESS CAUTIOUSPROFILE52%(102)48%(98)Gender Split0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%18-24 25-34 35-44 45-54 55-64 65+Age Split41% areworking full time(110)Social DNA Map*Base: All adults 18+ Source: GB TGI 2013 Q1HPTTotalpopHigh Global CapitalLow Global CapitalCulturalDominatingEconomicDominating* See Social DNA Map Explanation in AppendixFactorVert.%IndexTelephone/InternetBanking Facilities14% 112Range of services 8% 108Introductory offers 4% 108848997103100107111104106Top Bank Retailers(By Index)109(15%)108(13%)108(9%)
CASHLESS CAUTIOUSPROFILESource: GB TGI 2013 Q1You have to be careful about thequality of things you buy on theinternet71% (109)I don’t like the idea ofbeing in debt82% (97)I spend money morecarefully than I used to70% (98)13% (106)fall into the Shopper ArchetypesConscious Connoisseurs or QualityCrusadersTOP EATERIES BY %30% (107)30% (108)TOP SUPERMARKETS BY %42% (103)31% (102)Base: All adults 18+
High IndexingPurchasing Factors Banks(By Index)CASHLESS CONCERNEDPROFILE57%(111)43%(89)Gender Split0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%18-24 25-34 35-44 45-54 55-64 65+Age Split23% areworking full time(60)Social DNA Map*Base: All adults 18+ Source: GB TGI 2013 Q1HPTTotalpopHigh Global CapitalLow Global CapitalCulturalDominatingEconomicDominating* See Social DNA Map Explanation in AppendixFactorVert.%IndexCounter Staff/PersonalService21% 138Locality 25% 135Interest rates 20% 9516614911811010863746650Top Bank Retailers(By Index)142(2%)136(1%)91(13%)
CASHLESS CONCERNEDPROFILESource: GB TGI 2013 Q1If there’s something I want I saveup for it108 (73%)I like to pay cash foreverything I buy171 (78%)I am very good at managingmoney110 (59%)14% (135)fall into the Shopper ArchetypeAccustomed AcquirersHIGH INDEXING SUPERMARKETS138 (7%)135 (4%)Base: All adults 18+
PRACTICAL APPLICATIONSRETAILERSSource: GB TGI 2013 Q1CashlessConvertsCashlessCautiousCashlessConcerned17%  64%  19% CashlessConvertsCashlessCautiousCashlessConcerned14%  63%  23% CashlessConvertsCashlessCautiousCashlessConcerned8% 56% 35%TOTAL POPULATION% of Waitrose Shoppers % of Sainsbury’s Shoppers% of total populationWaitrose and Sainsbury’s are particularly likely to attract Cashless Converts.Cashless Converts bring business efficiencies for retailers as handling lesscash reduces security issues and enables faster transaction times. It alsoreduces costs associated with processing and sorting cash. With so manycustomers already familiar with a cashless existence, retailers like thesewould do well to encourage more consumers into this cashless group bypioneering contactless payment at self-service checkouts.Base: All adults 18+
PRACTICAL APPLICATIONSRETAILERSSource: GB TGI 2013 Q1CashlessConvertsCashlessCautiousCashlessConcerned7%  53%  40% CashlessConvertsCashlessCautiousCashlessConcerned9%  52%  39% CashlessConvertsCashlessCautiousCashlessConcerned8% 56% 35%TOTAL POPULATION% of The Co-Op’s Shoppers % of Marks & Spencers Shoppers% of total populationThe Co-Op and Marks & Spencer are at the other end of the spectrum: theyboth have few customers in the Cashless Converts group.They, therefore, have enormous scope for making gains in the cashlessmarket. They need to encourage consumers to adopt the cashless andcontactless technologies they offer and encourage more self-service.Consumers need to be nudged into a cashless existence, and The Co-Opand Marks & Spencer have much to gain from doing this.Base: All adults 18+
PRACTICAL APPLICATIONSBANKSSource: GB TGI 2013 Q1Cashless Converts are 63% more likely to use HSBC [14%]Factors influencingchoice of bankCashless Converts(Index)Reward Scheme 205Special Offers 153Interest Rate 136CashlessConvertsCashlessCautiousCashlessConcerned17% 65% 18%% of HSBC customersHSBC are in a goodposition to take leadershipin changing customerbehaviour. They alreadyhave a strong cashlesscustomer base which theycould well increase.Base: All adults 18+
PRACTICAL APPLICATIONSBANKSSource: GB TGI 2013 Q1CashlessConvertsCashlessCautiousCashlessConcerned12% 64% 24%% of Santander customersSantander have a smaller proportion of Cashless Converts. Theytherefore have substantial work to do to boost this group. Key businessefficiencies can be made through encouraging cashless consumption, soit is worth Santander’s while to boost their proportion of CashlessConverts. They could do this through promotions and reward schemes.Base: All adults 18+