Moving Towards a Cashless Society

Many online retailers are embracing the trend towards a cashless society, but what about the financial services andcashless society banking sectors? Not only do they need to innovate and provide their customers with the technology to make transactions and manage their finances, but there are also opportunities to sell financial products in this new financial eco-system.

Internet access facilitates an online and offline cashless society, creating opportunities to automate the banking environment on the High Street, as well as providing financial services directly to consumers’ mobiles and other devices.

The impact of a cashless society is already being seen in local bank branches. It is a long time since banks employed a long line of cashiers waiting to process their customers’ cash. The banking experience has become increasingly automated as cash transactions have reduced; enabling banks to streamline their staffing requirements and focus on delivering digital services both in branch and online.

Smartphones are revolutionising the payment sector and financial service providers must embrace this to remain competitive. Money transfer, direct payment apps and mobile wallet solutions all remove the need for banking customers to carry cash, allowing payments to be made B2B or B2C, wherever and whenever it is convenient.

Innovation In The Banking Sector

While the majority of bricks and mortar stores in European countries still take cash transactions, they are increasingly taking electronic payments, even for small amounts, as many customers do not carry sufficient cash in their wallets. Payments cards, mobile payments and NFC technology are all contributing to a faster and more convenient checkout process.

For banks and financial intuitions facilitating this will help their retail customers remain competitive and provide private account holders with the payment options they want. It also has cost benefits for the banking sector, alleviating the cost of cash management, logistics and security.

Banks such as Barclays are expanding their digital services, recently rolling their mobile cheque service scheme out to another million customers. Instead of visiting a branch to pay in cheques, customers can now take a photo of the cheque and pay it into their account online.

Santandar is embracing innovation and the fintech eco-system with endeavours such as their branded digital bank, Openbank in Spain, and investing in fintech through their investment fund InnoVentures.

Elsewhere Lloyds Bank are investigating how mobile apps can be used to interact with customers considering making a purchase, by showing them how that payment would impact on their account.

Banks that don’t innovate are at risk of becoming ‘just the plumbing’, according to Lloyds Bank head of digital transformation Terry Cordeiro. Speaking at the Tug Life pop-up event in London earlier this year, he described how fintech startups and challenger banks are squeezing the marketplace, forcing the larger banks to find new ways to compete.

Delivering Value Through Mobile Technology

With a wealth of data available, the banking sector is ideally placed to use technology to find new ways of engaging with their customers. Mobile apps should not just confined to providing balance checking and mobile deposits, or enabling payments through mobile wallet and NFC technology. They can also be used to sell financial services such as mortgages and loans. Value-adding mobile apps that include information such as mortgage rates, calculators and advice for homebuyers can be linked to mCommerce sites, channelling potential prospects to services and the application process.

In 2015 mCommerce sales in Europe are estimated to be €54 billion and forecast to grow at 88.8%, with €23 billion spend on tablets this year (2015) and €31 billion on smartphones. Financial service providers need to keep up with this trend if they wish to remain competitive in a cashless society.

For more on the payments industry landscape, read our 2015 roundup of developments in the sector: Transformation of the Payments Industry: 2015 Round Up