ATM Industry Association Study: 'Access to Cash: The First Step toward Financial Inclusion'

May 5, 2017 Share Source

This in-depth study of cash and financial inclusion by ATMIA shows that cash is an integral part of every community. With a chapter devoted to case studies of Kenya's M-Peso and Brazil, UK and Philippine’s ATMs, we can observe the necessity not just for cash but for the having cash as a payment option. 

The report concludes that in the face of paranoias of a fast growing digital age, we must stand by cash as an alternative for ethical and logistical reasons.  Because not only is cash the preferred and often only option for much of the developing world, but it ensures 'Universality, Non-Discrimination, Trust and Contingency'. 

Executive summary

An estimated 2 billion adults worldwide live without a bank account, according to the World Bank. Unable to provide financial security for themselves or their families, this vulnerable “unbanked” part of the population relies primarily on cash for survival. As policymakers, banks, non-governmental organizations and private sector actors come together to eradicate financial exclusion, careful consideration must be given to the needs of the communities most affected by it. Cash will, and should, remain a vital part of the transition from exclusion to inclusion.

As part of its broader goal of eliminating poverty, the United Nations has defined financial inclusion as: "Universal Access, at a reasonable cost, to a range of financial services for everyone needing them, provided by a diversity of sound and sustainable institutions."

 

"If poverty is the principal driver of financial exclusion, limiting the use of cash—the most basic means of storing value—would cripple any effort to tackle it."
" Agis Consulting p. 22 Access to Cash: First Step towards Financial...

'...traditional financial institutions fail to reach a large portion of those living in rural or remote areas, where issues such as underdeveloped infrastructure or geographical obstacles prevent dependable delivery of services. Fortunately, promising solutions to these problems have emerged in the form of mobile payment systems, like MPesa in Kenya, as well as new schemes to raise the presence of automatic teller machines (ATMs) in these underserved areas.'

'...Many are barred from financial access due to their lack of proof of identity. Although large-scale efforts are underway to improve the prevalence of documentation throughout the world, cash allows these individuals to continue to freely support themselves and their families without any strings attached. Expanding access to cash also addresses the substantial challenges faced by the financially illiterate when handling money. Those without education in basic financial concepts or who cannot perform abstract calculations count on physical banknotes as a tool to measure value for their households and small businesses.'

"59% of the financially excluded cite insufficient funds as a reason for not having a bank account."
" Agis Consulting p. 11 Access to Cash: First Step towards Financial...

'Expanding access to cash also addresses the substantial challenges faced by the financially illiterate when handling money. Those without education in basic financial concepts or who cannot perform abstract calculations count on physical banknotes as a tool to measure value for their households and small businesses.'

'Financial exclusion only reinforces the marginalisation of those who suffer from these more entrenched social problems.'

'By far, the greatest barrier to having a bank account most often cited by the financially excluded is a lack of sufficient funds. Other reasons for exclusion include living in an underserved rural area, the inability to prove one’s identity and lack of financial literacy. Over 200 million micro, small and medium-sized businesses also lack access to basic bank accounts and adequate financing.'

'Aid to the impoverished has traditionally consisted in delivering commodities or vouchers that restrict payments to a list of specific goods. Today, organisations like Give Directly are leading a new trend towards direct cash transfers in humanitarian aid, empowering those in need to provide for themselves in the ways they know best. Innovations in electronic payments are also enhancing the efficiency of remittances, an even larger source of aid than the humanitarian sector. Above all, these cash transfers result in more value for the local economy than in-kind aid and thus help reduce poverty in the long term...'

 Download paper here

Source:

Agis Consulting, 2017, "Access to Cash: The First Step towards Financial Inclusion.” ATM Industry Association. PDF. 

Last Updated: July 27, 2017