News in Brief

Westpac Invest in New POS Terminals to Help the Visually Impaired

Westpac, a major Australian bank, has re-designed its point-of-sale (POS) terminals to help blind and visually impaired people use them more easily. 110,000 machines are being changed for Android-based devices with new functionality.

The bank, along with its partner Verifone, held workshops to understand the needs of people with vision, hearing and motor impairments. Depending on their needs, people can alternate colour contrasts, magnification and audio prompts.

Privacy for PIN entry is an issue for this group of people, and so an ‘accessibility’ mode has been designed that uses audio and sound to help orientation on a blank screen.

Explaining the Great COVID Cash Surge

Jonathan Ashworth and Charles A Goodhart’s recent paper, ‘The Great Covid Cash Surge – Digitalisation Hasn’t Dented Cash’s Safe Haven Role’, covers ground that is now well-trodden by others. They have used an extensive data set from 70 countries, including all 37 OECD countries, to look at what has happened to cash over 2020 and 2021.

Hidden in it are a number of eye-catching details, for example one in six US dollars in circulation now have been issued since the start of the pandemic, and useful data on the median and mean rates of cash growth across the OECD, BRICs and US, Europe, Canada, UK and Australia. There are some big differences, cash falling 1.5% and 1% in Norway and Sweden respectively compared with Chile rising 37.7% and Poland 36.9%.

The review of the drivers of this widespread growth confirms earlier findings, a huge demand for cash, particularly high value denominations, as a precaution against the unknown. They consider the highly unusual cash to deposit ratio which should have increased, based on previous crisis, but has not. It fell in the UK and US and was stable across the Eurozone. They suggest a combination of large transfer payments by governments to their people at the same time as an inability of people to spend money as a primary cause.

Finally, they consider how little cash has returned to central banks. In the US it fell 15% over 2020 while in the last major crisis, the financial crisis of 2009, it fell only 6.1%. They found a close inverse relationship between currency returns and how stringent governments’ anti COVID measures were.

Cash has not returned to pre-COVID levels, suggesting a cash cycle that remains depressed. In the euro area, the authors suggest this is due to continued weakness in activities where cash would historically have been used, structural changes in spending methods with a move to electronic payments and the significant fall in tourism.

The Future of Bank Branches

RBR held a conference on ‘Branch Transformation’ in London at the start of December.

The main theme of the first day was the challenge of creating a cost-effective high street presence. Lots of work going on to make the future branch convivial, convenient and effective with technology a big part of the solution. Much talk of video conferencing, helping customers transition to apps and online, using advanced equipment such as Teller Cash Dispensers and deposit accepting ATMs etc. Surveys and research leading to a wide range of different approaches all to achieve the same thing.

The Newcastle Building Society gave one of the most interesting talks. It is a traditional community focused mutual which is expanding its branch network by partnering in the community to provide a footprint where all other banks have gone. It is also a fintech, providing an online infrastructure for financial services available for start-ups to use as well as its own offering.

A key reason for the branch network is that its research shows that people want to be confident where their money is. They may not go into the branch, but they want it to be there. If this is right, the reduction in bank branches brings real risks.

Nedbank ATMs Available to MTN App Users

In South Africa Nedbank is partnering with MTN Mobile Money and its MoMo app to allow cash withdraws from all Nedbank ATMs or use ‘cash-out’ (sometimes known as cashback in other countries) at participating retail stores.

The service comes with fees, R10 for transactions up to R1,000 rising to R30 for withdrawals of R2-3,000. ATM withdrawals have to be between 7am and 6pm. MoMo allows users a range of financial services including sending and receiving money.

The Environmental Responsibility of Central Banks

The Bank of Finland’s 2020 report provides details of how many kilometres cash travels in Finland’s cash supply chain each year, nine million being the answer. Between 2017 and 2020 this figure has declined year-on-year, although 2020 saw the biggest decrease driven by the pandemic.

The bank also notes how the Notes Held to Order custodial system for cash has also reduced the need to move cash for cash processing. The Bank regards environmental responsibility as an ‘essential part of the cash supply governance process’, and it aims to use energy more efficiently and to extend the lifespan of banknotes.

Five Years after Demonetisation in India

Five years after India demonetised its top two denominations, cash usage remains high in India, with digital payments primarily replacing credit cards.

The Reserve Bank of India said on 8 October 2021 that cash in circulation had reached R28.3 trillion, up 58% since the demonetisation in November 2016. Cash as a share of GDP has reached 15%, up from 11.57% in 2005.

The objective of the demonetisation was said to be to tackle corruption and bring India into the digital payment era, although with virtually all demonetised banknotes redeemed, the case for the former was vastly over-inflated.

The Indian government has restricted the use of cash for transactions exceeding R50,000 and in August launched the e-RUPI, a cashless and cardless form of direct benefit transfer, as part of its drive to move to digital payments. The Jan Dhan scheme aims to help everybody have a bank account, but 150 million Indians are reported yet to get one.

While digital payments are moving forward fast, cash appears to remain central to Indian payments.