How to focus on digital transactions and keep customers away from cash withdrawal
By: Markswebb Team
Tags: Cash, Digital Transactions, Startup, Banking Technology, Fintech

How to focus on digital transactions and keep customers away from cash withdrawal Markswebb Team Follow Aug 27 · 6 min read

It is hard to motivate customers to carry out more non-cash transactions especially if the bank’s geography historically shows vast cash circulation. To do so, it’s important to look into detail of the bank’s processes, explore customers’ journeys and their behaviors, and review the functionality and convenience of online channels. However, the most insightful tool is in-depth customer research.

In this article, we show how we solved that kind of task for a large Russian bank.

The in-depth interviews and the field research are the sourcessource of insights

The primary samples of customers are designed with formal indicators we got from the bank’s internal systems:

Customers who instantly withdraw all the money they got paid with. Customers who actively use a bank card for purchases. Customers who applied for a card themselves (not for salary). Customers who make all of their payments in a mobile banking app. Customers who make their payments with the internet-banking instead of the mobile banking app. Customers who lately applied for a loan or a credit card.

Conversations with clients helped us find out how they keep and handle money, transfer it and make purchases. The very first interviews showed the link between how customers get money and how they spend it. Customers don’t seek to replenish their cards or withdraw cash with no significant need; and they prefer spending money the way they get it.

The results of the interviews were supplemented with our field research: we made purchases in local stores and public eating places, had a chat with retailers, made payments and money transfers, used digital services, and observed customers and the bank’s staff in its branches.

Why do people still use cash

The vast cash circulation can be explained by the nature of the region where a lot of small and micro businesses are represented. These businesses prefer using cash: taxi drivers, private tour guides, small vendors, street sellers, etc. It can also be explained by the lack of habitual digital services as the region is poorly developed digitally. The bank can affect most of these factors only indirectly by teaching customers and forming new digital habits.

People store cash because there are a lot of places that only accept this type of payment. The travelers withdraw cash in advance, and the locals don’t seek to replenish their bank cards as they don’t want to take extra action with money. The interest on the deposit doesn’t provide any benefits and cannot motivate people to store money in a bank account as most people live paycheck to paycheck and don’t have much money. A lot of customers don’t know that non-cash payments are easy and convenient. Financial institutions refuse to tell people about the possibilities and convenience of digital services, and they don’t use onboarding within digital services. Customers don’t understand the profit provided by the loyalty program as the bank explains its details very poorly, the discounts can’t be accumulated, and the amount of cashback isn’t that big. Customers can only wonder how much they can save. Small businesses aren’t interested in cards acquiring and using POS -terminals. The free-of-charge acquiring conditions are very high, and this type of payment and its pros are alien to entrepreneurs as customers continue using cash. Customers aren’t used to transferring money to friends as it’s easier and more convenient to exchange cash. Some people even hesitate and think that money transfers can attract too much attention from the bank and the tax authorities. Furthermore, wire transfers take more time than exchanging cash. The bank doesn’t make it clear for customers that bank cards can be used for online shopping. Usually, customers get cards from other banks which they can surely use for online purchases. Customers don’t think that the mobile banking app is easy and convenient to use for regular tasks. For example, one can’t fill in the description of the money transfer or add comments for recipients. Some important services aren’t available in digital channels. Online payments and services are a crucial driver for the use of digital banking but customers couldn’t use these services because of some UX problems.

The audience thresholds for using non-cash payments remain because of the region’s nature, low financial literacy and inconvenient digital banking services.

Framework for digital transactions’ growth

To retain customers from withdrawing cash and motivate them to use digital channels, we needed to solve 3 global tasks:

Make more payment features, and make payments easier and more convenient — for those who already use digital channels.

Make it possible to switch to digital channels, increase motivation and lower the entry thresholds — for those who prefer using cash.

Establish conditions throughout the region to involve as many participants ininto digital transactions as possible.

Here are some particular initiatives that banks can take: