EXCLUSIVE: ‘Innovation where you least expect’ – Ron Delnevo, Cash and Card Consultants in ‘The Fintech Magazine’
So, you think cash is dull? Ron Delnevo, Chairman of Cash and Card Consultants, would politely beg to disagree…
I remember attending an event organised by the UK Payment Systems Regulator (PSR), a few years ago, where a senior partner from a huge consultancy was chairing the morning’s proceedings.
He wore a very expensive suit and an air of supreme confidence, keenly aware of his own authority in relation to all things innovation. The guru had almost completed his opening remarks when, with an amazed look on his face, he told us that: “Innovation goes on in the most surprising places. Why, only this morning, I even heard of an innovation in the ATM industry!”
Unluckily for ‘Mr Amazed’, his audience included several genuine experts in all things ATMs. The PSR found itself buried in their complaints on social media, to the extent that, before lunch, the crestfallen guru had to return to the stage to give a shamefaced apology for being ignorant of the fact that the ATM industry is a veritable fulcrum of innovation.
In fact, both ATMs and cash are benefitting from a continuous flow of it. Some small, some major, but all play their part in delivering constant improvements.
During my time as CEO of Bank Machine, I saw many such small changes introduced – the most memorable, perhaps, being the introduction of Cockney as a language option on ATMs in London, which brought worldwide publicity and substantial extra business to our machines!
Fast-forward to today, and there are three innovations that I’d highlight as having a positive impact on ATMs and cash in 2021 and beyond.
The first is a new entrant to the UK ATM market: the Compact400, designed for retail environments.
As you can see from the images opposite, this machine takes up very little space in the shop window, which is a vital consideration for retailers. The in-store footprint is also among the smallest ever for a through-the-wall ATM, and the inner workings of the machine include a single, uniquely-compact cash dispenser, designed specifically for retailers who wish to self-fill.
A collection of small innovations brought together, like this, in one product can have a transformative impact on the market, and this ATM will certainly be transforming many shop windows in the coming months, as operator Cash On The Move, which had the ATM designed and built to its specification, installs them around the UK.
Moving on to cash itself, an oft-heard complaint from the public is that too many coins accumulate in pockets and purses. Often, these coins find their way to a seemingly permanent resting place in jam jars and the like. There are seven billion 2p coins alone circulating – or contributing to the jam jar economy – on our small Island. But it’s not the 2p pieces that weigh most heavily upon us; it’s the £1 and £2 coins that threaten to make holes in our pockets and give us all arms like Turkish weightlifters.
Too many coins often means too few banknotes and that is certainly the case where £1 coins are concerned. I have lost count of the number of times a shop assistant has apologised to me by saying ‘sorry! No £5 notes’, and then handed me enough metal to ballast the Queen Mary 2.
Going back to my Bank Machine days, the now governor of the Bank of England, Andrew Bailey, asked me some years ago to help him get more fivers into circulation. Knowing that helping the central bank guarantees me a knighthood before the Grim Reaper calls, I instantly came up with an innovation. Namely, £5 note-only ATMs. My own company installed around 200 of them, helping to increase the number of £5 notes in circulation by more than 1,000 per cent, from around 10 million to more than 110 million.
Today, no one seems to have the appetite to fill ATMs with low-denomination banknotes, so our pockets overflow with the highest-value coins. But help is on the way, in the shape of another innovation from a company that wants to take coins off our hands –British startup Shrap, founded in 2017. It has a clear vision to build a more efficient alternative to those heavy coins.
It may seem an odd time to start tackling the issue of coins; the mainstream media would have everyone believe that cash is already dead, after all. But, as of November 2020, there had, in fact, been a 10 per cent increase in the value of banknotes in circulation in the UK, from a pre-pandemic £70billion to a then-current £78billion. And, importantly for Shrap, there are at least £5billion-worth of coins out there, too.
Shrap aims to change this with a hybrid app/card that replicates the features of cash: it’s bearer-based, free and anonymous to use, and inclusive of all in society. Deployed at point of sale, the customer pays in cash but the merchant issues the change onto the customer’s Shrap app or card.
The solution eliminates the need for businesses to maintain a float of coins, which are increasingly expensive to handle. Instead, each holds a digital float on the Shrap platform, allowing change to be issued electronically when a customer makes a cash purchase. For consumers, Shrap acts like a digital jam jar, allowing change to be stored and spent – anonymously and for free – on the platform (although the option to withdraw it to a bank account does come with a charge).
Interestingly, Shrap’s model also presents a solution to one of the biggest challenges faced by wallet providers: how a cash-favouring customer can load funds onto their wallet. With Shrap, this is done as part of a direct exchange for cash with a business at point of sale.
Even as a lover of cash – someone who wants to go on using banknotes literally forever – I find the idea of reducing the number of coins I have to cart around very appealing. Shrap will be hoping that tens of millions of UK cash users share my enthusiasm.
The final innovation I want to highlight is somewhat related to cashback, a little-used service introduced into the UK as far back as 1987. There seems to be a desire to resuscitate old-style cashback as a significant element of public access to cash in the UK. While cost issues are often cited for its historic lack of success, it is my strong belief that the major obstacle that has prevented cashback from being widely adopted in the UK, is uncertainty.
The public haven’t known which businesses offer cashback; whether they would be asked to make a purchase; whether they could/should ask for cashback or not; whether they might be refused or, perhaps, be offered a lower amount of cash than they wanted; whether they would be charged to get their money.
And here I must declare an interest. I have believed for some time that retailers can play an important role in meeting the cash needs of their local communities, and I had been looking for a solution that could bring this about. Last year I found it, in the shape of a company called Sonect. In fact, I liked this solution so much that I am now supporting the UK launch.
Sonect’s app-based service was launched in Switzerland four years ago. It neatly removes all the uncertainty of traditional cashback, giving the public using the service total confidence that they can get the cash they need. Using the Sonect app, they can reserve the amount they want, even before leaving home, to be picked up locally at a participating business. The businesses – mainly retailers and cafes – contracted to provide the Sonect service, commit to having the cash available, using the Sonect Retailer App to confirm their real-time ability to provide cash in the required amount to each Sonect customer. In short, it is a ‘click & collect’ service for cash, with the tills in every participating business effectively become virtual ATMs. Uncertainty removed. Peace of mind created. And it’s free for consumers to use.
Ultimately, Sonect will connect many thousands of UK businesses with cash to dispense in communities around the country, to millions of consumers who will have their demand for cash satisfied.
More good news is that, during 2021, cash deposit functionality will be added to the Sonect app. This further innovation will give both the public and businesses a vital local cash deposit service, something that an increasing number of communities lack due to the continuing closure of bank and post office branches.
So there you have it. Three innovations that will make cash more convenient to both access and use in 2021, while at the same time helping to reduce the costs associated with cash circulation. In other words, a win-win for everyone.
Digital and technological innovation is moving at an astonishing pace – and, rather than killing off the world’s favourite payment method, it can help to make cash even more convenient and user-friendly. ‘Mr Amazed’ will no doubt morph to ‘Mr Astounded’!