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What role should cash play in banks?
Should retail banks dump cash? Or should they adjust how they use it?
November 12, 2024 by Bradley Cooper — Editor, ATM Marketplace & Food Truck Operator
It's no surprise that retail banks want to offset the price of cash, and they are using many different strategies of doing so. Some are closing branches, others are pushing out more self-service channels. Others are embracing cashless branches. Should retail banks dump cash? Or should they adjust how they use it?
Jean-Pierre Lacroix, president of Shikatani Lacroix Design addressed this question during a panel at Cash in the USA held on Oct. 22 in Nashville, Tennessee. He said that large financial institutions are increasingly asking questions such as whether they should keep vaults, upgrade ATMs, invest in cash recyclers or not.
However, a larger issue for Lacroix is that although banks are attempting to move toward relational bank model, "today's financial brand consumer relationships are transactional, not relationship based."
Even though digital banking has made banking easier for customers, it has not addressed customer anxiety. "Customers report a high degree of anxiety over financial future. That's global," Lacroix said. In addition, customers who only use the digital channel are far more likely to switch banks.
Banks, Lacroix said, have an opportunity to help out customer anxiety by ensuring customers they can meet all of their cash needs.
When looking at the statistics, Lacroix said that 77% of banks said there handling more cash and customers are increasingly using ATMs for cash. In other words, cash usage isn't going away by any means.
This is reflected in several stats, Lacroix said. For one, customers are holding more cash than ever in their house for savings. In addition, 21% of customers said they would switch banks if they stopped accepting change, while 33% said they would keep their primary bank but get a secondary bank for change.
"83% of 16-28 respondents said drive-thru ATM is primary for cash," Lacroix said. However, 68% of older respondents use the branch for cash transactions.
He pointed out that this is a missed opportunity for banks because the marketing messages on ATMs is not targeted towards experiential messaging but instead retirement that is not relevant to the younger users.
In Europe, banks are increasingly relying on ATMs, with some aiming to have 100% of transactions completed on ATMs, instead of the teller.
By moving cash handling over to recyclers and ATMs, Lacroix said that banks can instead make that critical jump from transactional relationships to offering advice to their customers.
When asked what builds loyalty in an SLD study, "92% said a great branch experience and providing great financial advice" would lead them to becoming loyal customers.
One aspect of this branch experience is to empower workers to train customers on how to use ATMs for more basic transactions so that lines remain short and focused on giving customer advice.
"54% of customers said they were not approached to be trained on ATMs when there was a long line," Lacroix said. "64% said they would be positive when bankers offered to provide ATM training."
Lacroix said that some tellers are hesitant to train customers on the ATM, because they are worried about being replaced. He argued that this is not the case, as tellers won't be replaced, but instead they will be able to refocus on giving customers financial advice.
In conclusion, banks shouldn't ditch cash, instead they should aim to automate traditional transactions with cash so they can create a better banking experience. With this experience, banks can actually meet customer needs by reducing their financial anxiety.
"You have a role to play in managing that anxiety. You're the doorway to cash," Lacroix said.
About Bradley Cooper
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