Cashless society is still a long way off

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Cashless society is still a long way off 
The Nation: 22 Jul 2010
Demise of cash a long way off, consultant firm says
By The Nation
Published on July 22, 2010

The vision of a cashless society will not become reality in the foreseeable future, telecom consulting firm Ovum predicted, as cash will remain the primary method of retail payment by volume in the coming years.

Ovum senior analyst Jaroslaw Knapik said: "While there are continuing predictions about the declining use of cash, and forms of payment that could take over, the majority of retail transactions are still being settled with cash.

"The amount of cash in circulation is constantly on the rise. According to the European Central Bank, the number of banknotes from the euro zone is rising by around 9 per cent per year.

"There are also over 40 per cent more US dollar bills available compared [with] the beginning of the millennium.

Given the fact that most cash is being distributed by ATMs, this channel is still expected to grow. Asia-Pacific is the fastest-growing market and accounts for over 40 per cent of global ATM hardware shipments."

Ovum believes competitive banks need to maintain or expand their automated-teller-machine channels. However, this needs to happen with a strong focus on efficiency, as economic uncertainty is still a strong inhibitor to further growth, Knapik said.

"The growing cost of managing the ATM channel is driving further technology investments, with the major focus being on lowering the cost base. Banks need to look at cost-efficient management of the ATM channel through integration of the various service components."

While existing ATM models are functioning reasonably well overall, Ovum believes there is still a huge opportunity for increased efficiency through, for example, integration of the support model (subcontract field engineers, telecommunications), more accurate resource management of network peak times, and optimisation of hardware replacement strategy - in essence creating a centre of excellence for the entire ATM channel management under one umbrella. Ovum expects this trend to accelerate in the coming years.

"Given the fact that vendors able to provide integrated services are emerging, such a re-engineering of processes and the underlying infrastructure is becoming much more feasible to manage," Knapik said.