Providing cash and paper check access is still important for banks

The news: Transfers of paper-based funds—cash and checks—remain important despite the rise of digital banking, per a pair of PYMNTS reports.

Staying power, at a glance: One piece of evidence is the persistent use of ATMs for banking.

• PYMNTS found that while only 10.6% of survey respondents said ATMs were the most-used way of engaging with their bank accounts, 40.7% said that they still used ATMs for at least part of their engagement.

In a separate report, PYMNTS pointed out that cash and checks continue to comprise significant shares of payments.

• PYMNTS data showed that 18% of disbursements remain check-based, even though direct-to-bank transactions grew four-fold.
• A 2021 report on US consumers from the Federal Reserve Bank of San Francisco showed that cash made up 19% of payments in 2020, though this represented a decline from 2019.

Suggested adaptations: ATMs can stay relevant by changing how they operate, PYMNTS suggests.

• Cash-recycling ATMs, which take deposited cash and reuse it for withdrawals, have demonstrated promise. Cash recycling could also decrease the risks of ATMs running out of available cash for customers, PYMNTS adds.
• The number of cash-recycling ATMs globally is projected to grow from about 1 million in 2021 to approximately 1.2 million in 2026, per RBR.

Neobanks have particular challenges with paper-based transfers due to their lack of branches, according to PYMNTS, which offers two suggestions:

• Establish a money mobility network, a technological approach designed to foster fund flows across different payment methods.
• Partner with multiple ATM providers and get fee waivers, as in the example of Quontic Bank.

The big takeaway: Even as in-person services continue to fall in relative importance, US banking players must continue accommodating paper-based fund transfers.

The UK faces similar concerns about cash availability, and also offers some solutions for preserving paper-based flows. Measures tried in one or both countries include:

• Deploy shared branches and back free-to-use ATMs.
• Establish banking kiosks, either by banks or standalone operators.
• Strike free cash-deposit deals with retailers, like Chime’s agreement with Walgreens.