In 2020, everything changed. The pandemic fundamentally shifted the way we work, bank, and play toward digital. What role will cash play in our future? And how does that affect credit unions?
This question has been plaguing us for months now. I admit that I have been a polemicist regarding digital transformation. I believe that most credit unions simply can’t compete if they rely on branches, cash, and person-to-person banking. Big banks, fintechs, and big tech companies will provide the best digital banking solutions. But as COVID-19 “digitizes” our communities, it also digitizes our banking habits, and the long-term viability of community banking becomes uncertain…
My apologies for constantly yelling that the sky is falling!
I mention my doom-and-gloom schtick because the inception of this article was in a place of hope. I believe credit unions will be fine—better, even. I’ll get to why later. First, let’s talk about cash trends.
Cash Trends During COVID-19
ModusBox writes one of my favorite blogs. And, when you think about it, it’s obvious why:
Most vendors in the credit union world develop technology to make one, two, maybe a handful of processes better, easier, or more cost-effective. That’s a lot of smart people, great products, and good intentions…
But all their work is siloed. They weren’t all developed to work together—or with every core! ModusBox doesn’t just develop technology—they handle difficult core integrations, ensuring that credit unions can actually use the technology available to them on the market. (Yes, they can do that Zelle® integration I was asking for!)
So, I read the ModusBox blog because it doesn’t just showcase new technology—it discusses how to make that technology available to everyone. And I came across their “3 Lessons Learned During COVID-19 About the Future of Cash” post. Here’s the short version:
- The intro: The prevalence of cash has been falling for years. Card and digital payments have been on the rise. COVID-19 expedited this change, but it didn’t cause it. There’s no “going back” to the way things were before re: cash usage.
- The first lesson: During economic uncertainty, people liquidate assets and hoard cash. Financial institutions ran low on paper bills and change.
- The second lesson: Risk of contagion made people worry about the cleanliness of cash. In fact, we should have worried about that much sooner! They link to a study showing that cash and cards are as germy as a subway pole or station bathroom. Yikes.
- The third lesson: Branches and ATMs were necessary for people to pull out cash. However, with fewer cash-only events happening, the demand for cash has plummeted. The role of branches—and the need for ATMs—may change… further driving the acceleration away from cash!
- The key numbers: ModusBox listed a few alarming statistics. For example, through the first half of the pandemic, online sales increased 52% over the previous year. Digital payments as a whole are up 50% worldwide, and consumers “expressed the intention to continue doing so.”
But wait! That looks like a lot of data to support doom and gloom, right?
Almost. But who writes about it matters. That’s why I introduced ModusBox.
Credit Unions, Technology, and the Future of Cash
ModusBox describe themselves as “a global team of infrastructure and integration nerds.” They believe that technology can help people—especially the most vulnerable and disadvantaged. Ultimately, they wish to improve lives by accelerating universal access to reimagined financial services.
Their words, not mine.
But it’s easy to see why such a group would give me hope. “Integration nerds” allow credit unions to actually use—and deliver to their members—the modern banking solutions that are out there. And their mission aligns so well with credit unions! It’s all just people empowering other people.
So basically, there may not be a big future for cash. But credit unions will be just fine—if they take digital transformation seriously, that is.
Yes, this has felt like quite a blurb for a fintech. But it’s Friday. Please consider this our formal return to the Fintech Friday series, where we discuss startups, mature fintechs, and everything in between.
CU 2.0 spends the majority of our time looking through new technology and fintechs entering the credit union space. We come across a lot of interesting solutions, and we’re always happy to share what we learn.
In addition to blogs, we provide free, informal calls each quarter to discuss technologies, companies, and strategies that caught our eye. The calls are individualized, informal, and usually take about 30 minutes. This service is available exclusively to executives and upper management.
Please simply contact us if this interests you—or if you’d like to learn more.