Cash preference by South Africans persists, and the ‘Cash 4.0’ ecosystem predicted pre-COVID has started to emerge and brings with it a number of pain points for banks and fintechs to address.
This is according to Barry Röhrs, Director at Röhrs and Associates and MoData advisor and partner, who was speaking at the recent Currency Research EMEA Cash Cycle & Payments Seminar, in Cape Town. The event highlighted South Africa's ongoing reliance on cash and the fact that 85% of the population are dependent on cash.
Speaking on ‘De-Cashing vs Digitisation of the Cash Cycle’, Röhrs said: “South Africa is dependent on cash, and the combination of banks, cash-in-transit (CIT) companies, fintechs and retailers that operate the nation’s cash infrastructure are doing a good job in rising to challenges as they happen. For example, during the COVID-19 pandemic, cash transactional activity recovered back to its trend line almost immediately, whereas cards took 12 months for the transactional volumes and activity to get back to where they were. Cash is trusted in times of crisis, and it’s cheaper than card.”
He noted: “The Cash 4.0 ecosystem is one where the manual cash handling activities are digitised and automated. Manual cash handling activities that previously took place either over the counter at a branch or at bank-owned infrastructure are now starting to take place in retail, for example. And that's being enabled by intelligent cash handling and cash automation infrastructure. Now, to make all of that stuff work, the banks in particular previously had massive operations and IT departments.”
Röhrs, a proponent of both digital alternatives to cash, as well as digitisation of cash-based solutions, said both de-cashing and Cash 4.0 would play a role in the South African market for the foreseeable future.
“The persistence of cash in South Africa highlights a challenge for proponents of digital alternatives: despite the growing push to digital payments, the enduring appeal of cash lies in the elegant simplicity of its use case and the way it conceals the complexity of the systems behind it. The digital solutions we are building must match the reliability, ease of use and trust inherent in cash,” he said.
“The reciprocal challenge for cash tech practitioners is that, to maintain public trust, we must ensure the resilience and sustainability of the broader ecosystem around cash through collaboration, standardisation and interoperability, while preserving simplicity.”
Röhrs said the Cash 4.0 ecosystem required new enabling capabilities to solve for pain points such as downtime, reactive service models, long transactional times and cost optimisation.
He highlighted overlaps between cash and digital payments, saying: “The success of omnichannel interoperable payment solutions, which are extending from the space held by traditional banks and cards into retail channels, necessitates a review of cash solutions, operations capabilities and service models.”
Fintechs and independent ATM deployers are leading the charge in the South African market, and their CashTech solutions are winning the battle for retailer locations, he said.
Röhrs said MoData was well positioned to help all cash actors from banks to fintechs in the transition to Cash 4.0 due to its vast experience and solutions in both cash and payments. MoData solutions provide optimised traditional cash forecasting and logistics, while enabling migration from legacy platforms to modern enterprise-ready payment platforms, which cater for emerging requirements such as rapid payments, central bank digital currencies, blockchain settlements and other nascent payment methods.
Physical cash has an expensive and complex logistics supply chain behind it, and this is where MoData’s partner CashPilot comes in. CashPilot’s technology is relied on around the world to allow supply chain practitioners to optimise the supply chain to make sure that your cash is where they need it, when they need it.
Röhrs emphasised: “MoData is an industry leading expert, trusted by banks. It has the industry knowledge and expertise, and the technical expertise to implement, support and maintain these tools.”
‘Cash 4.0’ ecosystem’ is a term frequently ascribed to by Zeenan Green in 2019, describing how emerging technology would enable cash exchange between consumers and merchants and recycling by fintechs and retailers.
Find out more here: https://exex.eu/wp-content/uploads/2019/05/pdf-Zennan-Green.pdf
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