Despite the increasing popularity of debit cards and the rise of contactless and mobile payments, the amount of cash in circulation is constantly on the rise.

Ovum cites European Central Bank figures which show that the number of banknotes in the Eurozone is growing by around nine per cent a year while there are over 40% more US dollar bills available than at the beginning of the millennium.

Ovum says this continuing dominance of cash means that banks need to maintain or expand their ATM networks while also investing in technology to lower costs.

The firm says there is a huge opportunity for increased efficiency through integration of the support model (sub-contract field engineers, CIT, telecommunications), more accurate resource management of the network peak times and optimisation of hardware replacement strategy.

Jaroslaw Knapik, senior analyst, Ovum, says: "The growing cost of managing the ATM channel is driving further technology investments, with the major focus being on lowering the cost base. Banks need to look at cost-efficient management of the ATM channel through integration of the various service components."

Although Ovum insists cash is alive and kicking, there is a growing acceptance that its time will, eventually, be up. Earlier this month a poll by UK discount Web site MyVoucherCodes users found 52% think cash could be obsolete by 2030 while the Payments Council recently predicted the rise of the debit card will leave notes and coins all but redundant by 2050.

A major argument in favour of ditching cash is the expense, according to a report published February by Retail Banking Research, which claims using notes and coins costs every person in Europe EUR130 a year.