23rd September 2019 | Daniel Kubera | Business Analyst

The Future of Banking Is Mobile and Mostly Cashless

Will our next generations see physical payment cards and bank branches only in the pictures? What do vending machines have in common with first mobile payments? Can you imagine that earliest payment card has been invented 70 years ago? Will a country with no ATMs or banks branches ever exist?

Origins of cashless

Cashless and digital tendencies can be seen everywhere nowadays. Even if the cashless revolution is observed along the current decade, the concept was invented 70 years ago. The same as most inventions, it came about by coincidence. In 1949 Frank Namara forgot his wallet while going to a restaurant. He felt embarrassed because his business partners were with him. He went on to find a solution so as never to  be in the same situation again. One year later, he came to the same restaurant and paid for his meal by his small cardboard card. Soon, more and more enterprises honoured these cards. The card has become a success in the US, with 42 thousand card holders 2 years later. In 1953 businesses across the UK, Canada, Mexico and Cuba started honouring these cards, making it the first internationally accepted multipurpose charge card1

Cashless country

The cards were a prototype of  more than 14 billion debit cards worldwide currently. Cash is getting less popular year over year2. The cashless community can be advantageous not only for the users, but for the government also. As there is no tangible money to steal, the number of crimes can be reduced. Money laundering is made more difficult. Finally, costs associated to handling and storing paper money are eliminated3. Sweden, the first country in Europe which adopted banknotes, is introducing own digital currency in 2021 and plans to become the first cashless society in the world by 2023. By now, only 1% of the transactions are made by cash in Sweden4, comparing to the 31% in the Euro area5

Cashless is becoming less cards dependent

There is a high possibility our next generations are only going to see physical cash in pictures. Today people can pay using their mobile phones and watches, through Android Pay and Apple Pay or even by scanning QR codes, as $37,4 trillion of the transactions volume in China (2018) through Alipay and WeChat pay6Cashless is getting more mobile-dependent, even non cards-dependent. Besides the current peak demand for smartphones, payments through mobile phones has been available for more than two decades now7. In 1997, Coca-Cola, in cooperation with a Finnish mobile operator, delivered a service of paying and demanding drinks through sending an SMS and receiving the order through a vending machine8. The charge for the order was added to their phone bills. This experiment was carried out in University of Technology in Helsinki. After two weeks, more than a third of the drinks had been ordered through the phones. This kind of vending machines was also introduced on a main railway station in Sydney9. These visionary inventions have been an answer to the human need for day-to-day actions to be more available and convenient. Cashless trend makes payments safer and gradually eliminates the need to go to ATMs and withdraw cash. 

Branches which disappeared 

Cashless trend is similar with digital banking and banks’ branches whose number in the UK has been reduced by 63% in last 30 years. Though the first online banking solution was presented in the 1980s and it has been popularized a decade later. In 1994, Stanford Credit Union (US bank) was the first to create an online banking website10. Seven years later, 19 million US households were accessing their bank accounts online11. Across all the continents, more and more direct banks (banks with no branches) were founded. The online banking revolution has been visible not only in the US, but in the UK also. In 2007, 30% of the British adults were using online banking. Compared to the 69% in 2018 this may initially indicate that the future of banking is online12

Mobile on the top

The rise of the online is incontestable. However, the current trend is even pushing away the online banking in favour of the mobile banking, as it is presented in the chart below.


Source: CACI Banking Trend Analysis

As we can see in 2010, traditional access channels for personal account interactions were the most used, with a slightly less common internet usage and a small share assigned to mobile.

Five years later, mobile had a dominance of the all the channels, with 56% share and ahead of the internet banking, with traditional branch & telephone on the bottom. 

The trend of growing mobile interactions is expected to maintain up to 2020, continuously reducing traditional distribution channels and even the internet. 

The growth of mobile banking is a result of the customers’ satisfaction and as a result, tendency to recommend. Customers of direct banks are more satisfied than traditional, branch-based banks13. The most desired feature is the ability to manage all financial accounts in a single location or app and real time access to financial information. 

No branches, no ATMs

With first inventions made in the previous century, communities all over the world are becoming more cashless year over year. Cashless trend is evaluating and possibly would become more mobile than card dependent. Some countries as Sweden14 or Norway15, consider or plan ditching cash in favour of widely available and secure digital currency. Analogies can be seen in banks’ branches which are being closed with continuously growing mobile banking trend. Mobile banking can be cheaper or even free of charge, more secure, available and less time-consuming. More and more people all over the world do not have to visit branch or ATM nowadays. Will this trend be maintained, and future of banking be mobile and cashless? Yes. Will it completely ditch the cash machines and banks’ branches? It is highly possible but for now, we cannot be sure about it. One thing is certain: banking will never be the same.

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Payments – the present and the future