Cashless Society — a Pipe-Dream or a Reality?

It is believed the Chinese were the first to start using a durable lightweight substance as evidence of a promise to pay a bearer on demand. The practice was adopted through the Mongol Empire and the concept caught on in Europe through travellers and traders like Marco Polo.

For more than 200 years, the world has used cash as the basis of economic activity. But is that about to radically change with the rapid development of digital payment systems, products and services?

Doing a quick online search, there are conflicting theories about what a cashless society actually means and whether or not it is a pipe-dream that will never fully realise its potential.

Whichever viewpoint you take, a recent article in Fast Co makes a compelling point: “…one thing is clear: As online shopping becomes yet more prevalent, and prepaid credit cards take the place of more and more low-value cash transactions, cash is well on its way to becoming obsolete.”

When you couple this with the emergence of technology like Near Field Communication (NFC) and Bluetooth Low Energy (BLE), which allows chip-enabled cards, mobile phones and even smart watches to conduct transactions with a mere waft of the payment device over a programmed payment point, it is hard to argue against the growth of cashless transactions. Other technologies like the peer to peer payments will also limit the transfer of cash among friends, colleagues and others.

Mashreq is seeing a dramatic shift in the adoption of cashless solutions among its UAE customers. Launched in 2014, the mobile to mobile feature is becoming very popular among customers. More than 90 per cent of low ticket transfers through the bank are conducted through SNAPP, Mashreq’s mobile banking application — a more than 100 per cent growth over 2015. And peer to peer transactions through MashreqOnline have increased 256 per cent when compared to 2015.

One of the critical factors in developing banking solutions has always been to have the customer in mind when finding ways to make banking simpler, faster and secure.

If we go back more than 2000 years and the origins of the Chinese using ‘promissory notes’ — the fore-runner to banknotes — merchants and wholesalers wanted to avoid using heavy quantities of coinage in commercial transactions.

Since then, technology has always played a part in the development of banking solutions. The invention of the printing press played its part in the development of currencies and banking products across the world.

The private telegraph lines were used by banks connected to clearing houses until superseded by the telephone. Then we had telex, facsimile machines, computers and now the internet.

The possibilities for the future of digital banking are exciting. The way in which we bank and conduct transactions is rapidly changing and it is being driven from both customers and through emerging technologies.

The UAE is at an advantage compared with other countries when looking at the possibilities — and the probability — of a cashless society. The country’s digital objectives — and Dubai’s ambitions to be a ‘smart-city’ — mean it is gearing up to be one of the most advanced digital societies in the world. With this come the obvious advantages for its citizens, residents and visitors, but there are also opportunities for brands to develop digital products and services that make it easier and simpler for people to live, work and entertain themselves.

Many leading local brands are at the forefront of digital adoption that enables customers to take full advantage of the digital ecosystems emerging in the Emirates. Digital innovation is only the next layer in the history of banking. The digital revolution means more than ever we need to look to the future and develop products and solutions that make things possible for our customers.

Part of that journey means partnering with digital disrupters and online innovators to bring exciting and New-Age ways of making banking transactions. At the heart of any new development though, has to be the customer.

What I mean by that is for a society to adopt and drive a cashless ecosystem; these solutions need to work for the society as a whole. These solutions need to be meaningful products and solutions that are simple, efficient and secure and not just a fad or gimmick that works for a while and then becomes obsolete.

If we continue to embrace the digital revolution and keep the customer at the heart of every decision, of every product development, then they will come with us on that journey.”

Aref Al Ramli is Head of Digital Banking & Innovation at Mashreq.