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March 14 , 2019

Cashless society and legacy technology; a perfect storm.

In response to the recently published article by The Guardian , “UK cash system ‘on the verge of collapse’, report finds - a writeup of an independent report called the Access to Cash Review -  it is worth emphasising we may be heading toward something far worse when it comes to making payments.


At our current trajectory, we may be heading toward a perfect storm of ‘cashlessness’ in combination with outdated, overly-expensive and inflexible electronic payment infrastructure -  the outcome of which would be very, very, bad for well, everyone.


The Review warns the system allowing people to use cash in the UK is at risk of "falling apart". The price of handling cash for businesses it too high. Why? Because proprietary IT systems haven’t moved on for the last 30-years and have stifled the development of leaner, more cost-efficient ways of managing cash and encouraging innovation in the payments space.


At the same time, financial institutions aren’t replacing a once successful system of exchanging goods with something as reliable as cash. Consumer watchdog Which Money has reported there were 302 incidents that prevented customers from making payments in the last nine months of 2018, some of which lasted for several days.


If both these trends continue unchallenged, cashlessness and an unreliable electronic payments service, consumers and businesses may at times be left without a guaranteed way of giving or receiving payments.


Cheaper and more flexible alternatives exist compared to the overwhelming majority of today’s banking technology. Yet, decision makers continue to believe it’s better to patch-up legacy systems than invest in new ones – why change something if it ain’t broke? The trouble is, it is broken.


Financial institutions need to use technology that can manage electronic payments without exception and without failure, and at the same time, keep cash in circulation as the experimental phase of this new era continues.


Cloud-native technology is designed to cope with the demands of a 21st-Century payments environment. What we’re seeing and the reason we keep hearing about services outages in the press is that new services, developed using modern technologies and deployed in a public or private cloud, struggle to integrate with legacy systems.


Decision makers are part of the way there; they see the benefits that new services deployed on the cloud can add for consumers and business but aren’t yet willing to tear the band-aid off and abandon the old guard.


The patch-up so they can catch-up approach is significantly more costly and diverts resources away from investing in the cloud-native, future-proofed technology they - and we - really need.


We originally published this article on Finextra.