Innovations in digital have transformed the world of banking over the last decade, but could the coronavirus pandemic quicken the shift to a cashless society? Could such a thing be possible?
Pete Markey, chief marketing officer at TSB believes were are still very dependent on physical currency. Speaking at The Drum’s Digital Transformation Festival, Markey said: "Never say never [on becoming a cashless society] but I think there are sections of society who are still quite dependant on cash."
Also on the panel was Sarah Ellis Davies, associate partner at You and Mr Jones and Blood, who echoed Markey’s thoughts: “There are some sections of society that will find a transition to a cashless society a very easy and natural thing to do."
“Cash still means something to quite a lot of people. For children who are learning, for example, learning about money makes maths fun”.
Ellis Davies also pointed that for many vulnerable people around the world, “cash is still incredibly important.”
“Even in societies where initiatives have come in to make digital transactions so much easier, such as M-Pesa in Kenya, for example. There, nine out of 10 payments are still cash. I think for many in society there will be a move towards being more cashless, but for some, it will still play an important role."
The cashless rollout would be dependent on the collection of data, which would, in turn, allow banks to better help their customers manage their finances.
“More data to help your customers is never a bad thing,” said Markey. “We’re already seeing that banks that look at spending habits can advise customers on their next utilities partner, for example. More data, used in the right ways can actually be helpful to customers and help them to make the right decisions.”
“More than ever, money confidence is going to be a growing need for people. Digital tools, we know, can help facilitate that. So I might not personally be good at looking across my finances and predicting my spend patterns, or where I overspend or underspend. So the use of data in an educational or helpful way, to manage finances, is only helpful.”
However, Ellis Davies cautioned that, “wherever data is concerned in relation to people’s finances, it’s going to come under a huge amount of scrutiny.”
“If this is done in such a way that it is helping people, and it is transparent and it feels that it is at the benefit of the customer rather than the institution, then it has huge amounts of use in society. But the moment that is breached in some way, and it becomes very clear to people that the gain is for the bank or the institution rather than for them, then distrust will happen.
“Particularly with money, it’s all about trust and particularly with data. Transparency is really the most important thing to think about.”
It remains to be seen whether the ongoing coronavirus pandemic will change consumer perception regarding the safety of carrying and exchanging cash. Some changes are already being made, such as the limit for contactless payments being raised from £30 to £45 as of 1 April in order minimise the need for cash transactions.
Markey outlined that the priority for tradional banks such as TSB, the "priority is keeping as many branches open as possible to help our customers, but that’s an evolving position we’ll just have to keep monitoring."
“At the moment we’re taking every possible precaution to support our customers and partners in branches around hygiene, and I think we’ve just got to wait and see how consumer perceptions adjust over the coming weeks.”
Since the time of recording, government advice is to stay at home as much as possible, and as such, customers should use online and over-the-phone banking services wherever possible.