Last month myself and a colleague made a trip over to Stockholm, Sweden as part of an ATM Innovation Forum hosted by our company. This represented a very interesting opportunity to firstly meet with the country's ATM operators and financial institutions, as well as first hand observe and analyze the much hyped apparent move of Sweden becoming the world's first "cashless" economy. 

The ATM market and cash use
Firstly some background, Sweden currently has approximately 3,000 ATMs. It is a somewhat ageing ATM install base, with the market mainly in future expected to be made up of ATM replacements. What is of interest is that each ATM handles a significantly higher volume of average transactions per month (4,700) compared to the global average of around 2,700.

Despite the push on the cashless society, there are still around 174 Million cash withdrawals at Swedish ATMs each year (Volume) and $24 Billion USD (Value) in cash withdrawals a year. Whilst acknowledging that there has been a slight decreasing trend – consumers clearly do still have an appetite for cash and the ATM and most importantly the central bank is issuing new banknotes and coins later in 2016.

Going fully cashless – or are they?
The financial technology media is full of references to Sweden almost being the vision of the future when it comes to retail banking, citing an alleged decreasing demand for cash in a market where card, mobile and P2P payments are well established. Yes – I observed the fact that consumers are indeed ahead of those in many other countries in terms of embracing more emerging digital payment methods such as Swish. Banks are very keen on a cashless society. This has meant that technology such as payment cards and mobile are well established with consumers and being used for all types of purchases of low value and high volume.

The main observation made in Sweden is that it is a very interesting 'test case' for what may happen globally such is the push to become cashless. Banks appear to be 'leaping' over the next phase of ATM innovation (such as Multi-Function and Branch Transformation) to go to straight to mobile and digital payments. Banks want to reduce cash usage and drive customers to internet and mobile. What has however become a possible 'fly in the ointment' in the last few weeks is that the central bank in Sweden appears to have put a halt to this push to a 100% cashless society.

Trying to go cashless
We had heard so much about the cashless society in Sweden, that we decided to see if we could get through the week without any cash. We both arrived in the country with no Kroner. The taxi to the hotel was easy, as they only accept cards, no cash at all. Everything was going well until needing to use the bathroom at lunchtime in a shopping center before a customer meeting. I arrived there only to find there was a charge of 10 Kroner, which is a coin. This meant I had to withdraw cash from a nearby ATM and then get it changed into coins at a cafe to get access to the facilities. Whilst not an ideal consumer experience, it highlighted perfectly a really practical challenge of assuming full adoption of cashless by everyone. So our experiment failed when we literally had to spend a penny!

The future – digital payments and cash together
The recent government announcement in Sweden combined with the self-service reinvention going on seems to suggest that both mobile payment, cashless and the ATM with cash are all going to be important channels for consumers in the future. Financial inclusion for all is clearly important - no matter what device or payment method people choose to use.

There will remain a fundamental legal requirement that places a duty on banks to provide cash services as a basic feature of payment accounts. Banks appear to have possibly reduced their cash handling services too fast, resulting in a lack of access to cash in less populated areas in particular. These are the main observations of the government putting a halt to this full adoption and removal of cash.

What does this mean?
Cash is still important to consumers – as shown just yesterday with the UK ATM and cash use figures. It's trusted, secure, reliable and has a tangible sense of worth, particularly handy when budgeting. Card use and mobile payments definitely provide flexibility and choice for consumers but a full cashless society is unlikely to appear, especially not to the overall widespread decline of the ATM and cash. What may transpire is a very interesting world of ATM and mobile convergence and the focus on an omni-channel experience where consumers have a choice of transactions.