Logo Courtesy of EY

Cashless Society Benefits Financial Crime Prevention but Raises Concerns with Inclusion and Data Privacy

Originally Published by EY

  • Majority believe financial institutions should make greater investments in cybersecurity to protect financial data

Cash is no longer king and will not be the preferred method of payment by 2030, according to an EY poll on digital and cash payments. The survey of financial services professionals indicates that while all respondents believe the end of cash is near, there are concerns over financial inclusion, data security and privacy that need to be ironed out.

The real cost of a cashless economy

Digitizing all transactions could lead to greater accountability and reduce the occurrence of black-market transactions, with respondents citing the top benefits of a cashless economy being convenience (39%) and financial crime prevention (36%)However, concern was raised over the impact on financial inclusion, where vulnerable, underserved and unbanked communities may face barriers integrating into cashless economies.

Thirty-six percent of all respondents cited social exclusion as the most negative impact of a cashless society. Of this figure, 100% of respondents based in Asia, the Middle East, Africa, Latin America and Australasia cited this as the most negative by-product, versus only 38% of European-based respondents and 33% of respondents based in North America. Other areas of concern included:

  • Increased potential for cyber risk (20%)
  • Potential for mass outages (20%)
  • Greater government control (14%)
  • Costs faced by the business sector (8%)

Banks responsible for protecting data

Respondents indicate that getting authentication right for digital payments is critical to overcoming the trust barrier that is deterring some from fully engaging in a cashless economy. The majority (52%) believe that financial institutions can do more to reassure consumers that their data is protected through increased investment in cybersecurity protocols.

Jan Bellens, EY Global Banking & Capital Markets Sector Leader, says:

“As we enter this new monetary world, financial institutions play an integral role in the protection of personal financial data. Investing in greater cybersecurity measures and educating consumers on the safe use of digital payments will help build the trust necessary for more widespread adoption of cashless payment options.”

The cashless revolution is coming, eventually

While digital payments are on the rise, going completely cashless is not going to happen overnight, according to the survey. An overwhelming 96% of respondents believe that digital payments will be the dominant form of payment in 2030. Of that figure, 59% believe mobile payments will be the most common, with 31% choosing biometrics, including facial recognition, fingerprinting and retinal scanning.

However, when asked how much cash they were carrying at the time, just under a quarter of respondents (23%) — largely based in Europe — had gone completely cashless. The majority of respondents (49%) were carrying up to £50, and more than a quarter (27%) — including all respondents based in Latin America and Africa — stated they were carrying more than £50.

Consumer buy-in is critical, but regional disparity may create speed bumps

More than a third (36%) of respondents believe the most effective way to achieve a cashless economy will come via consumer buy-in, but broken down by region, the results show a more complex picture.

Survey participants based in Asia stated that industry bodies and governments (36%) should address concerns around trust and security, as well as regulate the practices of non-banks such as peer-to-peer (P2P) lenders and cryptocurrency traders.

On the other hand, the majority (45%) of European-based respondents said consumer adoption is the most important factor, hinting that while greater options may become available via PSD2 and Open Banking, the responsibility will rest on the public to embrace new forms of payments.

Bellens adds:

“Markets around the world are transitioning to cashless transactions at different rates as regulatory discussions, consumer buy-in and technologies vary by region. Despite these differences, cashless transactions are increasing, and financial institutions have an opportunity to work closely with businesses, FinTechs and government bodies to provide payments that are efficient and safe, while supporting financial inclusion.”

For more information on the transition to a cashless society, visit: ey.com/endofcash.

Latest News

AT&T Launches Summer Learning Academy

Originally posted on ATT.com College student? Summer internship fall through? We have an option. Think back to a time when you were waiting to hear about something that could change the trajectory of your life – a college application, a job offer, your first internship. Do you remember how you…

Marriott International Celebrates 93 Years

Originally published on LinkedIn by Bill Marriott, Executive Chairman of the Board at Marriott International. I woke up like a child on Christmas this morning because today marks the 93rd anniversary of Marriott International. When I think back to how my newlywed parents, J.W. and Alice Marriott, started a small root…