February 15, 2018
Cashless Britain: Reputational challenges lie ahead for financial services firmsContact
By Amy Boekstein, Junior Account Executive, Instinctif Partners
The cashless revolution
When was the last time you used or even saw a 2p coin? When was the last time you made a contactless card payment? Chances are you’ll be able to remember the latter far easier than the former.
For financial services firms trying to navigate this evolving environment, there are challenges in communicating their strategy and position to consumers and businesses. From what payment technology they are backing through to where they stand on the future role of cash – it is not a straightforward course to chart.
It is easy to forget that the cashless revolution – which refers to the shift from physical to electronic payments – only really took hold in 2016, when half of all payments in the UK were made by card. To put this in context, according to a recent study, the UK ranks third in the world on adopting cashless technology, ranking behind Canada (first) and Sweden (second).
What we now readily consider the norm – contactless payments, Apple and Android Pay, mobile banking and so on – was relatively unheard of only a decade ago. The closure of bank branches and ATMs across the country is a stark symptom of this trend.
For the generation now entering the financial system, millennials and tech-savvy adults, the outlook is optimistic, as financial services companies are responding to their needs and preferences.
Obstacles to overcome
In light of this swift uptake of technology, there are communications obstacles that financial services companies will need to overcome. Just as cheques were phased out nearly a decade ago – innovation and change are often met with backlash.
A key concern is the needs of the elderly and vulnerable, and to ensure they are not excluded. Whilst innovation may benefit the economy as a whole, leaving a generation behind is simply not an option and is socially irresponsible.
Financial services companies will need to gain customers’ trust that these payment innovations and technologies are met with robust safety, security and protection from fraud, and to convey that this is a top priority.
It is also important to communicate that digital is not just for the sake of digital, but to highlight how a cashless economy has countless benefits for businesses and consumers alike. Businesses can accurately track digital payments, so losing money and petty theft would be a thing of the past. While for consumers, everyday tasks are streamlined to quicker, more efficient and advanced platforms.
What comes next?
According to Payments UK, cash usage will lag behind debit card payments by the end of 2018. So if these fundamental changes to how we consume are well underway and the tipping point is imminent, then what are the next big trends to shake up the market?
Biometrics and voice recognition are being used on some phone and banking apps. Artificial Intelligence and Blockchain are already disrupting financial services – and this is only the tip of the iceberg.
Great changes will often be met with criticism and some level of scepticism. As drivers of these changes, financial services firms have a social obligation to educate and communicate how and why they are harnessing cashless for the benefit of consumers and the economy.
So to thrive in this ever-changing environment, financial services companies need to communicate effectively. Those that do can expect to see improved customer satisfaction, retention and acquisition.
Now, where did I put that 2p coin…?