EXCLUSIVE: ‘‘Real’ Lessons in Payment Choice’ – Ron Delnevo, Cash and Card Consultants in ‘The Paytech Magazine’

Ron Delnevo, Chair of Cash and Card Consultants, asks why the UK Access To Cash Review looked to Sweden and not Brazil as a model for inclusion

I remember meeting Natalie Ceeney, chair of the UK’s Access To Cash Review, back in early 2018, before her review group started its work.

We went for afternoon tea in the rather splendid surroundings of the Royal Exchange, just across the road from the Bank of England. My discussions with Natalie included how the Access To Cash Review would be conducted. I discovered a key element of the work would be a fact-finding visit to Sweden, the poster-child of those promoting a ‘cashless’ future for our planet.

I immediately suggested to Natalie that, instead of focussing on Sweden, where the banks have been trying to force through their cashless agenda for decades, the Review should look to learn lessons from a far larger and more cash-positive market – Brazil. There are several reasons why Brazil is a far more important market to consider than Sweden. Firstly, size. Sweden is tiny, a nation of only 10 million people. Brazil, on the other hand, has 211 million citizens.

It’s around 20 times the size by population, while Sweden’s land area is only six per cent of the South American giant. Secondly, Brazil has extensive long-term experience of running an ATM-pooling organisation. In Sweden, the banks created the pooling organisation, Bankomat, in 2010. TecBan, the Brazilian ATM-pooling organisation, was founded nearly 30 years earlier, in 1982. So TecBan has almost three decades of extra experience and learnings to share with anyone who wants to listen.

And TecBan has used its time well: to become a world-leading independent ATM network by developing technological and innovative solutions that integrate the physical and the digital in Brazil. Thirdly, the South American nation has a far more positive – and financially inclusive – approach to cash than Sweden. And, since 75 per cent of UK adults continue to use cash, Brazil is surely the country to copy, rather than a Scandinavian market where the majority of the public seems to have been lured away from using the currency by decades of anti-cash propaganda. Sadly, Natalie and her group never made it to Brazil.

So, let’s redress the omissions from the Access to Cash Review and find out exactly what Brazil can teach the UK – and, indeed, the rest of the world. The enduring popularity of cash in Brazil is the first aspect worthy of note. Today, 96 per cent of Brazilians continue to use cash to make retail purchases and other payments. However, Brazil is a sophisticated payments market, with extensive choice. In this context, it is interesting that recent research by its Instituto Locomotiva found that, among the A/B socio-economic groups, only 15 per cent of respondents reported that cash was their most-used method of payment.

When TecBan was created in 1982, there were not so many payment methods from which to choose. The group of banks that founded TecBan realised they had to do more to improve access to cash for all. TecBan was tasked with being the pooling organisation for off-branch ATMs, to cost-effectively increase the number of such machines available to the Brazilian public. TecBan therefore does not locate ATMs in tourist areas, where quick dynamic currency conversion profits would be the objective, or in areas where Brazilians may be willing and able to pay surcharges. No, the TecBan machines are located to meet the needs of the vast majority of the resident population, who want free access to the cash they use to live their lives, each and every day.

TecBan started in quite a small way. Even in 2006, its network was only 3,200 machines. However, organic growth since then has been truly phenomenal. Today, TecBan is proud to operate more than 23,700 ATMs – and the number is growing every year. The main business of TecBan is Banco24Horas, which is present in the lives of 145 million Brazilians. Through its financial services solutions, Banco24Horas facilitates financial inclusion for customers of more than 150 institutions. With 2.1 billion transactions carried out annually, Banco24Horas is the planet’s largest independent self-service network in terms of withdrawal volume. The relevance of TecBan ATMs to the daily life and economic prosperity of Brazil is evident from the statistic that the organisation operates more than 50 per cent of all off-branch ATMs in Brazil. The cash dispensed annually by those ATMs accounts for more than five per cent of Brazil’s GDP.

How has this success been achieved?

To find out, I caught up with Jaques Rosenzvaig, the charismatic CEO who has led TecBan throughout this period of exceptional growth. I asked him how TecBan had managed such exceptional growth.

“TecBan was set up all those years ago to ensure cash was conveniently available to everyone who relies on it to live their daily lives. We have never wavered from that objective. Everyone who works for TecBan – thousands of really motivated people – buys into what we are trying to achieve and strives to deliver success,” he says.

So, how does TecBan differ from the European model for operating a pooled ATM network?

“I believe the crucial difference is that TecBan, unlike some European pooled ATM organisations, is permitted to make profits to reinvest in improving the service provided to our 150 million customers,” says Rosenzvaig. “In the last decade alone, we have invested the equivalent of more than $750million – funds used to bring about continuous improvements, constantly enhancing the customer experience.”

He explained that the 150 financial services institutions with which TecBan is partnered, pay based on the package of services they wish to offer their customers.

“Some require only a small number of basic transactions; others want to take advantage of the entire suite of transactions we offer,” says Rosenzvaig. “Either way, all our partners enjoy the best pricing they can ever hope to achieve, brought about by our industry-leading operational efficiencies, coupled with the huge volumes of transactions we process. Our unit cost per transaction is very low.

“Innovation is absolutely the key to the success of our business. Our ATMs now allow customers to withdraw cash, with or without cards, via QR code or using biometrics. We are also leading the way in Brazil, by introducing deposit/recycling ATMs, which are barely seen in markets such as the UK and Sweden. Nobody using our ATMs thinks of them as being old-fashioned! These are trend-setting machines in a forward-looking business.

“We have also innovated in relation to the vertical integration of our business. TBNet is our in-house communications network and TBForte our own cash-in-transit operation. If we can do something to a higher standard and more cost-effectively in-house, that’s exactly what we do.”

But the future for TecBan is not simply about ATMs and cash. It’s leading and participating in many initiatives. Open Finance TecBan is a solution developed in partnership with Ozone, a company whose directors were heavily involved in the introduction of open banking in the UK. Its latest new products and services include ATManager and Integrated Services, to provide self-service management and maintenance solutions for the financial services and other markets.

The company has become involved in new platforms – an example being TecBan’s Cash Out In Commerce solution, aimed at increasing access to financial services in nearly 500 communities in which the company did not previously operate. And it’s targeting new business segments, such as with HubDigital, which includes services such as digital withdrawals and online deposits, connecting fintechs, social banks, digital wallets and retailers.

“We never stand still, never allow inertia to creep-in,” says Rosenzvaig. “Our history is one of growth, development and innovation, all focussed on delivering the financial inclusion all Brazilian citizens require and deserve.”

So, Jaques Rosenzvaig is very positive about the future And why wouldn’t he be, when TecBan has seen an eight-per-cent growth in the amount of cash withdrawn from its ATMs in 2020, even during a pandemic in which many countries experienced a reduction in ATM withdrawals?

As for payment choice, there is no problem in Brazil. Businesses are compelled by law to accept cash for payments and the Central Bank has close oversight of all aspects of cash supply. No vested interests can hope to force cash out of the Brazilian economy.

Of course, the work done by TecBan is not the only innovation seen in relation to access to cash in Brazil. The public can also now get the cash they want at thousands of National Lottery locations around the country. So, it looks like cash is here to stay in Brazil, which is surely in part because of the leadership of people like Jaques Rosenzvaig, someone determined to further the cause of financial inclusion.

Where is that leadership in Sweden – or, indeed, the UK? Sadly, lacking.

This article was published in The Paytech Magazine #09, Page 59-60