Cashless or Less-Cash? Credit Unions Preparing for the Digital Future

shopping with credit cardFor some time now, cash has taken a backseat to credit and debit cards in America, and digital and mobile banking has been evolving. The events of the past few years have only accelerated the transformation of more and better digital banking services, digital wallets, and other digital solutions to fill customer and member needs. Those credit unions who adapted and enhanced their digital banking platforms likely satisfied and maintained their members, but some might wonder if digital banking will replace all in-person transactions and maybe even cash itself.

While credit unions no doubt need to focus on their digital banking platforms to stay competitive, we believe it’s unlikely cash will disappear entirely. In fact, cash continues to have benefits, and credit unions should maintain their cash operations and in-person member services, while simultaneously striving to create the best digital member services and digital banking platform they can. The future will be about integrating new technologies and providing seamless digital and in-person member services for top member satisfaction.

The pros and cons of cash 

People are adapting digital banking technology at a rapid pace and using cash less and less. A U.S. Bank survey in 2017 revealed that among banking customers, about half preferred digital banking apps for payments and half preferred cash. Just two years later, the number of people who preferred cash fell to 37%. Also, many people, especially millennials and Generation Z, are using cash less frequently because they’re replacing it with solutions such as Zelle, Venmo and Paypal, which allow instant peer-to-peer payments.

However, although cash use is declining and has been for years, cash still has some benefits that help it maintain a loyal fanbase. Some of the benefits of cash can include:

  • Many people claim that using cash helps them stay within a budget and avoid debt and overspending.
  • For small, everyday transactions, cash is often the most convenient.
  • Cash allows users to remain anonymous and there is no risk of fraud or the compromising of your data.
  • Cash is still more universally accepted.

Less-affluent populations in the U.S. tend to use cash more exclusively, as many are unbanked or underbanked. Although people’s access to digital banking solutions is on the rise throughout the country, there are still problems with access and inclusivity. To combat this, two states, Massachusetts and New Jersey, as well as the cities of Philadelphia and San Francisco, have laws that require merchants to accept cash.

Finally, cash has a long history and tradition. Just because new technologies are replacing the need for it does not mean it will vanish entirely. According to the Federal Reserve, between 2019-2020, the circulation of U.S. banknotes actually rose by 5 billion, and Canada and Europe saw increased circulation of cash as well. So it doesn’t look like cash is going to disappear anytime soon.

Helping your credit union prepare

For credit unions trying to make adjustments to meet the growing need for less cash, it’s best to offer your members a variety of options, from top-notch digital banking services to quality in-person member services for people who want them. Choosing the right credit union core software can help your CU create an award-worthy digital banking platform that will attract new members and help your credit union continue to thrive.

To help your CU offer digital banking services that will simplify their lives and deliver on the experience they expect, download our Digital Account Services eGuide to learn more about how FLEX can help improve the digital services you offer to your members.

Digital Account Services eGuide


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