Cash review suggests fintech “is not a panacea” yet

Fintech still needs to do more to better serve the 8m UK consumers struggling with the emergence of a cashless society, despite the recent success of the fintech boom according to a survey and some market participants.

“Fintech is fantastic as it is, but it is not a panacea,” said banking specialist Mark Aldred by email, of ATM software firm, Auriga, the banking and cash management firm.

Access to Cash, an independent body established to gauge the effects of going cashless, reported in its final review in early March that 2.2m people rely solely on cash while 8m would struggle in a completely cash-free society.

“There are technological developments which could address many of the needs of those who depend on cash,” reads the executive summary, citing the UK’s reputation as a source of financial technology innovation. The word ‘fintech’ appears 19 times, each time exploring how the fledgling sector could better serve the 2.2m.

However, the report also acknowledges that fintechs tend to target early adopting consumers as opposed to the majority of late adopters who populate the 8m underserved.

“Fintech is seeking to move from its digitally-savvy demographic,” said Aldred. “Key to mainstream adoption of app-only banks and other fintech options will be how trust is developed in availability of these services.

While many fintech brands – Monzo, TransferWise, Revolut – are racing to capture the UK’s high-earners-not-rich-yet (HENRYs), other digital native fintechs are taking a different approach, by partnering with national institutions, such as the Post Office, according to Aldred.

Monese, a digital-only banking app, is one such fintech to have partnered with the Post Office to use their national infrastructure to reach a greater audience in rural areas, and offering six free ATM transactions within a monthly period.

“Monese was founded on the belief that technology should provide access to modern, convenient and affordable banking services for all,” said CEO Norris Koppel by email. “For us, access to cash is just as important as access to other aspects of transactional banking,

“We are providing access to cash via the Post Office and PayPoint. Since 2017, our customers have been able to top up their UK Monese accounts from nearly 40,000 Post Office and PayPoint locations,” he said, highlighting how this was more than all bank branches combined.

But the need for physical banking services might go beyond the 8m underserved as a recent catalogue of data breaches and IT outages has impacted consumer trust in the security and reliability of online banking, according to Aldred. Last year, TSB suffered a failed migration that saw 1.9m customers unable to access their funds.

“[IT] problems have highlighted how customers need the reassurance of physical branch access and thus how taking fintech into the mainstream is about making it seamlessly part of an omnichannel offering,” said Aldred.

According to him, fintechs and banks have a social responsibility to consumer banking markets.

“Both banks and fintechs are commercial organisations with financial priorities,” he said. “Nonetheless, banks have a longer heritage of being financial service custodians in our communities and their local ties should mean that they should play a leading role in addressing any exclusion from financial services.

“Many high-street banks like Lloyds and Barclays are trying to improve customers’ digital literacy. The organisation that holds my life savings or has agreed a line of credit is responsible for allowing me to access it in any way I wish. Fintechs have no responsibility, just a massive opportunity,” said Aldred.

Likewise, Koppel also aims to bring down the number of those financially excluded by partnering with Inclusion Signpost.

“Inclusion Signpost is an independent and respected accreditation service. It recognises financial services products that serve the needs of those who have struggled to access transactional banking, or have found that the services they can access don’t support the circumstances they are in,” he said.

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