What Does the Rise in Cashless Payments Mean?

A meme made its way onto Forbes a couple of months ago. Somehow, we didn’t see it until this week. But the content bears repeating here:

Who led your digital transformation?

  1. CEO
  2. CIO
  3. COVID-19

In the meme, option C is circled. If you don’t get the joke already, let me ruin it by explaining it to you:

Most businesses have been resisting digital transformation for years. Decades, even. And suddenly, all the little changes that organizations have made—all the small technological advances that improve the consumer experience—are now a necessity for modern survival… not just a convenience.

Coincidentally, cashless payments have been on the rise for years. What does the future look like with respect to cold, hard, cash?

 

COVID-19 and the Cashless Trend

It’s no secret that consumer behavior has changed in the face of the pandemic. The entire state of the economy has altered, and the U.S. GDP dropped considerably—enough to make any economist’s butthole pucker.

Sorry.

And these trends aren’t that surprising, considering. Yet, there’s one trend that has been so completely unsurprising that it barely feels worth talking about.

Which is exactly why we need to talk about it. It feels… inevitable… doesn’t it?

The rise in cashless payments. Consumers don’t want to handle wads of sticky bills. They could be covered with COVID-19 germs! Or just regular germs. But yes, they are often seen as vectors.

Furthermore, coin production halted temporarily. The resulting coin shortage has annoyed consumers and businesses alike—and sent financial institutions scrambling to keep up with the demand.

But an aversion to cash—and a shortage of coins—points to something bigger. Cashless payments are on the rise. And, as with many things in the age of COVID-19 (like work from home policies), we may never see a return to pre-pandemic behavior.

This issue absolutely should be part of every credit union’s and fintech’s strategic planning.

 

What to Expect from a Cashless Society

The U.S. is filled with a surprising amount of conspiracy theorists. That is, it’s filled with people who haven’t been trained to properly evaluate information, vet sources, and use common sense. (I blame memes and social media, which distill lengthy, nuanced issues into punchy, 2-sentence quips. And yes, I did start this blog with a meme. Sorry again.)

And these conspiracy theorists are sure that cashless payments are a move toward government control. Or maybe it’s about big businesses further eroding our privacy. Who knows.

They’re interesting thought experiments, but there are two things to actually worry about here—and one thing to look forward to.

  1. How can financial institutions meet consumer needs for cashless payment strategies?
  2. How can financial institutions and businesses serve the un- and underbanked?

And the thing to look forward to:

  1. What kind of efficiencies can be gained by going cashless?

Right now, we don’t have many answers. And to be frank, we have a lot more questions. It’s probably a good idea to start asking them now—and talking about them, too.

 

Additional Reading

What got us started on this topic? Honestly, besides the obvious (coin shortage signs on every business in town, constant “cashless payments” headlines)…

It was this short blog from PaymentVision. Check it out, give us your thoughts, and join the discussion on our Facebook group.

If you’re a credit union or fintech leader asking this question, talk it through with your peers. You can do that here.

Three Tips for Opening during Covid-19

Why Digital Trust and Security Are a Credit Union’s Most Valuable Asset

CU 2.0 Podcast 28: Patrick Conway PCUA on Lobbying and Much More

Welcome to episode 28 of the CU 2.0 Podcast.

Consider this podcast a crash course on credit union lobbying, 2019 style. Our instructor: Patrick Conway, CEO of the Pennsylvania Credit Union Association, a very large league with upwards of 370 members.

PCUA lobbies both in Harrisburg, the state capital and in Washington, DC.

A lot of what PCUA does, however, could be considered credit union education. For instance, PCUA has played a lead role in the new Philadelphia ID card – designed to give Philadelphia residents a low-cost ID card. Will it be adequate for opening a new account at a credit union? That’s still being sorted out and PCUA is in the mix, offering education and counsel to its members.

PCUA is doing likewise with cannabis banking, a topic of significant interest to Pennsylvania credit unions.

Along the way we also talk about credit unions haves and the have nots and, in Pennsylvania, assured Conway, the big credit unions offer plenty of assistance to smaller institutions.

Other topics on the agenda: credit union tax exemption, the CUNA-league relationship, and what credit union can do to win greater consumer acceptance.

This is a rich podcast.  Give it several listens.

Listen here.

credit union podcast

Check out other podcasts in the series here!

CU 2.0 Podcast 27: Hakan Nordfjell Gemalto on New Account Fraud

Welcome to episode 27 of the CU 2.0 Podcast.

You want to make new account opening easy and fraudsters want to exploit that loophole to rob your credit union.

That is the gist of today’s podcast with Hakan Nordfjell, head of digital banking at Gemalto. He tells about fraudster tricks and also the way financial institutions are fighting back.

He also warns that all your personal information is on the dark web and ready for fraudsters to exploit. PII – personally identifiable information – just isn’t enough to open new accounts securely today. You need more weapons. Nordfjell tells what.

This is information you need to know to protect your institution in what could be called the New Account Opening Wars.

Who’s winning?

Listen here.

Hakan Nordfjell, head of digital banking at Gemalto

Check out other podcasts in the series here!

CU 2.0 Podcast 26: Carl Memnon, COO Grain Technology on an End to Overdraft Fees

Welcome to episode 26 of the CU 2.0 Podcast.

Just say no more to overdraft fees. And make this decision good for your members and also good for your credit union. You may even grab a few customers away from Chase and the other money center banks.

That’s the promise of fintech startup Grain Technology.

In this podcast Grain co-founder and COO Carl Memnon tells about the company’s proprietary algorithm that lets it devise strategies for making fast loans to users who are about to trigger an overdraft charge and to also help those users find easy ways to start saving.

The latter is the why behind the company’s name – users will see their assets and their credit score grow “grain by grain,” said Memnon.

Memnon also talks about being in the Arizona fintech sandbox and the benefits for a small startup in playing in this sandbox.

Grain is actively seeking to align with credit unions that want to offer its overdraft protection service to members. In the podcast, Memnon tells about the benefits to credit unions but a big plus is having cool technology that in effect lets the member know they will see no more overdraft fees.

Listen up, you’ll find plenty of interest in this podcast.

Listen here.

BTW, the sirens you’ll hear are ambient noise in New York where Memnon was during the call.  If you’ve spent any time in New York you won’t even hear the siren. I couldn’t scrub it out so decided just to enjoy the New York moments.

 

Check out other podcasts in the series here!

CU 2.0 Podcast 25: Joe Bergeron on Vermont Credit Unions

It’s the Credit Union podcast! CU 2.0 is excited to bring you the twenty-fifth in a series of podcasts from Robert McGarvey. Welcome to the CU 2.0 Podcast, regular interviews with credit union leaders, thinkers, movers, shakers and more.

Say congratulations to Joe Bergeron – he’s in his 40th year of service to Vermont credit unions and he presently serves as CEO of the Association of Vermont Credit Unions where he has a close up view of the issues and ideas that rock his state’s 19 credit unions, which vary in size from a $1billion+ institution to tiny ones.

In this podcast, Bergeron also talks about the relationship between the state leagues and CUNA, state government and the federal, and how small credit unions sometimes matter way beyond their size.

For a topical hook, he also talks about CUNA’s GAC and what Vermont credit unions get from that confab.

It’s a wide-ranging talk with an eye always planted on the future.

Listen to this podcast here.

credit union leagues

Check out other podcasts in the series here!