significant influence on how British consumers spend, not least of
these an increasing use of cash.
notable during September and October, the period when what had
appeared to be a manageable global financial problem erupted into a
global crisis.
“We saw a marked increase in cash withdrawals
from ATMs in September,” Craig Broom, card services line director
at payments processor VocaLink, told EPI.
VocaLink provides the switching platform for all
of the UK’s 65,000 ATMs, the world’s busiest ATM network.
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Broom added that the increase accelerated in
October with the volume of cash withdrawals up 13 percent compared
with the previous month.
“People are definitely using more cash. It limits
spending,” said Broom.
The surge in cash withdrawals marked a
significant deviation from the trend over the past several
years.
For example, UK payments industry body APACS
reported that the volume of cash withdrawals from ATMs increased by
2.1 percent between the third quarter of 2007 and the third quarter
of 2008 to 734 million.
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By GlobalDataTotal value of withdrawals fell by 0.8 percent to
£47 billion representing an average of £64 per withdrawal, down
from £66 in the third quarter of 2007. In October the average was
about £59, said Broom.
Beyond higher ATM volumes, the financial crisis
presents VocaLink with potential growth in another area of its
business: ATM management outsourcing. Though most UK banks view
their ATM estates as a critical business component and run them
themselves, economic reality may force a rethink.
And, undoubtedly, banks will be looking to cut
costs wherever possible. According to Simon Ward, head of research
at New Star Asset Management, the largest component of UK banks’
earnings, net interest margin (the difference between the average
lending and deposit rates) recently reached its lowest level since
the firm began monitoring data in 1999.
This situation may even understate current
pressure on banks’ profitability, stressed Ward. For good reason it
seems.
Broom noted: “Banks will consider outsourcing
more seriously. It is on the agenda of most banks.”
A seasoned outsourced service supplier, VocaLink
is more than up to the challenge. In the ATM market alone, VocaLink
now manages some 30,000 machines.
Broom believes VocaLink’s “robust model” can
deliver many enhanced services to ATM estates. Among these is
deployment automation that enables a new ATM to be added to the
network in 30 minutes.
