Your Friday fix for global fintech and payments news
Will the UK's cash system collapse in the next ten years? How will the emerging trend of bank branch closures in the US affect US consumers’ access to cash? And what does QR code adoption in China spell for the country and its approach to its payments future? All covered once again in our Weekly Roundup - bringing you a bite-sized digest of all the biggest announcements from the past seven days to keep you connected with all that’s shaping our world this week.
- UK's cash system 'will collapse without new laws'
- New York leads US in bank branch closures
- Tencent and UnionPay’s QR code merger shows what regional payment schemes could look like
Two minutes to midnight – the UK’s cash system is destined for collapse; or so some say. Various campaigning groups have called on the British government this week to make plans to save banknotes and coins or risk having the UK’s entire cash system collapse completely within the next decade.
According to the Financial Inclusion Commission, nearly two million people in Britain don’t have a bank account meaning that they need cash, and access to it, to survive. So, whilst the steady move in the UK to a cashless society has opened up new, lucrative, and more fluid payment alternatives for consumers across the country – it needs to be addressed that we rarely consider those left behind by such dramatic changes. The Access to Cash review, an independent group dedicated to ensuring “that there remains an effective and inclusive cash access service that meets the needs of all consumers”, believes that the only way to ensure that such consumers aren’t left behind in the wake of technological progress is to enshrine financial inclusion as a part of UK law. This would involve ensuring that regulators have extra powers to force banks to provide suitable access to cash for customers. Whether these campaigners will see any success is yet to be seen, but the demand for cash is now – and if current trends proceed at their current rate – the UK could go the way of Sweden, hoarding cash in the face of a possible flaw in the digital payments ecosystem. Time will tell.
A report from Bloomberg this week has revealed that New York is leading the US in bank branch closures. In the past 12 months, the total number of its national bank branches has dropped by 6.8%, with the year prior showing a 2.2% decrease. It’s evident that bank branch closures are increasing year on year, and doing so rapidly. In the past 10 years, an excess of 13,200 branches have closed as the industry has gone digital, with the top 25 banks actually doubling their closure rates. This report is especially timely following on from our financial inclusion blog series, in which we detailed how New York specifically has experienced a backlash from its City Council against brick and mortar merchants in their refusal to accept cash based payments. Banks and FIs are steadily recognising a noticeable decline in interest in the desire for cash by most, yet in spite of this, there is still a need for cash, regardless of its popularity by the majority – will this news of bank branch closures spur the momentum behind a cashless society? It remains to be seen.
Regional payment schemes have become a hot topic this week as Tencent and state-owned UnionPay are reportedly integrating their QR code systems for mobile payments in China. In Fuzhou city, the unified QR code system is being trialled, alongside other joint projects including facial recognition being used as a token for payments. By offering a variety of the latest ways to pay using available technologies, financial service providers will be able to offer a more comprehensive payments service.
According to GlobalData Financial Services via Verdict: “It is arguably a lot easier for China to move towards a national or regional card scheme through the simple integration of mobile wallets, as the infrastructure is mostly cloud-based as opposed to card issuers.” A recent report from GlobalData identified that the size of the Chinese mobile wallet has doubled since 2016, with further increases likely until 2022.