The elusive cashless society
Are we living in a digital banking bubble, where all the QR codes, Bitcoin and mobile wallets are nothing more than huge investments propped up on the excitement of a bored and tired industry and a few compelling speakers? The latest report from Sainsbury's Bank suggests for all the hype cash is still the undisputed king of payments with cash withdrawals peaking at £11bn in December, writes Billy Bambrough
Are we living in a digital banking bubble, where all the QR codes, Bitcoin and mobile wallets are nothing more than huge investments propped up on the excitement of a bored and tired industry and a few compelling speakers? The latest report from Sainsbury’s Bank suggests for all the hype cash is still the undisputed king of payments with cash withdrawals peaking at £11bn in December, writes Billy Bambrough
With all the investment in the payments industry you might be surprised that by 2020, mobile payments are expected to represent just 1.4 % of total UK consumer spending.
When you are regularly attending events and reading papers that espouse the proliferation of digital payments its easy to forgot how far our society is from digital payments being the norm, for the vast majority of people outside of the industry, paying by any other way than cash or card for large purchases is highly unusual.
I’m often reminded that the UK is "behind" other countries in this aspect and when you look at over evidenced examples like M-PESA it’s easy to come to that conclusion.
In many ways I don’t dispute this, and perhaps I am arguing over semantics, but to say the UK and other western countries are "behind" markets where mobile and other digital payments are typical suggests we will eventually catch up with them.
I don’t think this should taken for guaranteed. In certain places in the world digital payments have been adopted because there is (or was) a payments problem. Large proportions of the population may have been unbanked and unable to pay for things other than with cash and in these cases digital banking solves a very real problem.
In countries where only a tiny percentage of people are unbanked, and many of these people choice, there is no need to find new ways to pay. At the checkout I have rarely felt it would save me enough time paying by any other way than cash to make it worth while.
As I write there are reports coming in of a second systems failure this week at one of the largest retail banks in the UK, RBS and its subsidiaries, potentially locking people out of their accounts online and if trying to pay by card or mobile at the till.
With the banks bound by inescapable legacy systems and unable to spend the money to fix them due to the seemingly unending battle between regulatory commitments and budgetary constraints would you really want to depend on anything other than cash right now?
One option is to move away from traditional banks altogether as fledgling banks find that even in their early days they are vastly more suited to handling payments on their shiny new IT systems. The immediate stumbling block in this case is that, despite consumer sentiment towards banks being at an all time low, refuse to trust many other than established banks with their money.
Are we chasing an unnecessary and impossible dream by trying to make digital payments work in the UK?