At certain times, people may start to wonder whether or not the FinTech sector is simply ahead of its time, as it is trying to solve problems most consumers and businesses won’t even admit are there. Why are we looking for new and innovative financial solutions when the demand for cash seems to be growing? And why is this demand growing in the first place? Consumers are not keen on keeping funds in their bank account, though, that much is certain.
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Global Cash ATM Withdrawal Numbers Increase
It might come as a surprise to find out a lot of people are withdrawing cash from ATMs around the world these days, as cash payments seem to be on their way out. In a way, the increasing number of cash withdrawals could throw a monkey wrench into the plans of many FinTech startups’ plans as they are working hard to come up with creating solutions that eliminate the need for cash altogether.
However, there is another factor determining the increasing amount of money withdrawn to bank ATMs: trust. Since the financial crisis of 2007 swept the world by storm – and not in a good way – consumers have been wary to store their funds in bank accounts. As we have seen during the Greece crisis of 2015, banks can limit the amount of funds customers can withdraw on a daily basis.
With more and more ATMs being installed around the world, the options for moving funds out of a bank account and into something else are plentiful. Withdrawing cash from a bank ATM does not mean customers are spending that funds in goods and services in the same form of payment. There is no way to track how cash is being used by consumers or businesses, as it is an anonymous exchange of value.
It has to be noted, however, this trend was most notable in developing markets, such as the Middle East and Asia-Pacific regions. In fact, those regions are unable to keep up with the growing demand for ATMs to get funds out of a bank account. Machine deployment is a tedious process, and customers are chomping at the bit to get their funds out whenever they want to.
Developed markets, such as the Western World, are seeing a stagnation – and even decline – in ATM usage altogether. That being said, the total withdrawal volume is growing in these regions as well. All signs are pointing towards a lack of trust between established financial institutions and their alienated customer base.
Why We Need FinTech Solutions
To answer the question as to why we need alternative solutions compared to banks, the answer is really simple: convenience. Using cash to pay for goods and services is no convenient option, as it forces consumers to carry a wallet on them at any given time. Mobile payment adoption is on the rise, and there is a big opportunity to get ahead banks in the mobile space.
Additionally, any financial solution that works beyond the borders of banking infrastructure has a good chance of becoming a major player in the next few years. Challenger banks are just the first step along the evolutionary path to a new financial world, and FinTech will play a major role in this process.
What are your thoughts on why people are withdrawing more cash from ATMs? Let us know in the comments below!
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