Synergy potential in Swiss cash infrastructure

Synergy potential in Swiss cash infrastructure

Demand-driven arrangement of cash supply for the future

Market Insight #5:

Synergy potential in Swiss cash infrastructure

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At a glance

A recent study commissioned by SIX shows that with an ideal distribution of ATMs the current number of withdrawals and deposits could be handled with just a third of the ATMs currently installed in Switzerland, while even improving access to cash for Swiss residents in rural areas. A look beyond Switzerland’s borders shows that “ATM pooling” represents a potential approach for reorganizing and securing the supply of cash for the population on a long-term basis. In the next step, SIX will conduct a detailed GAP analysis of the results of the study to gain further insights for the real arrangement of an optimally sized cash supply in Switzerland.

Facts & figures

~ 6’000 ~ 6’000

ATMs are currently available in Switzerland; many of them are far from fully utilized

2.16 2.16

ATMs per square meter of settled space put Switzerland well above the European average of 0.93

> 50 > 50

SIX currently processes ATM transactions for more than 50 site banks

Background information

Fewer cash transactions

The payment habits of the Swiss population have been changing for years already. Since 2015, cash withdrawals in Switzerland have fallen by 31%. The trend toward digital payment methods such as mobile payment and contactless debit cards was given an added boost during the COVID-19 pandemic in particular. Due to the decreasing number of transactions, it is becoming increasingly difficult for financial institutions to ensure efficient operation of their ATMs, as the cost per cash transaction will continue to rise as a result of the high infrastructure costs.

Growing inefficiency in ATM utilization

In view of the decreasing number of transactions, the question arises as to whether the ATM infrastructure in Switzerland could be made more efficient. The majority of ATMs process fewer than 30,000 transactions per year, far fewer than in most other countries. According to an RBR study, the average number of withdrawals per ATM in the 32 countries analyzed came to 34,750 in 2019. An ATM would easily be able to process more than 120,000 transactions per year, as was occasionally the case in Switzerland, too, before the coronavirus crisis.

Study on the ideal distribution of ATMs

Methodology

In collaboration with Senozon, SIX conducted a study to examine what the optimal sizing of the ATM infrastructure for Switzerland would need to be like, taking account of sociodemographic and mobility factors. The analyses are based on data, statistics, and measurements from land use and transport planning. Using a specially developed simulation technology, these data are connected to form overall models and checked for accuracy and precision using information collected from apps or cellphone data. Transaction potential can thus be broken down to hectare level and on this basis an ideal distribution of ATMs can be calculated to utilize the entire transaction potential

Results

With an ideal distribution, 2,161 ATMs at 1,159 locations would be enough to meet the demand for cash transactions at ATMs throughout Switzerland. The average per ATM per year would be around 80,000 transactions. This means that if the financial institutions take joint action, then Swiss ATM operators will be able to meet the population’s need for cash with around two-thirds fewer ATMs than today while even improving access to cash for Swiss residents in rural areas. In line with the new distribution, more ATMs would be placed at very busy locations, while in less busy areas the number of ATMs would be reduced where necessary. 

Outlook

SIX engages in regular dialog with the financial institutions with the aim of developing possible courses of action together for the future arrangement of cash management for the Swiss financial center and playing an active and central role here. SIX sees potential approaches in the ATM as a service and cash as a service models, which are already used internationally, for example in Belgium, the Netherlands, the UK, and Scandinavia. In the next step, SIX will conduct a GAP analysis of the results of the study to gain further insights for the real arrangement of an optimally sized ATM landscape in Switzerland.

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