2021: A Groundhog Year

2021 ends much as it began – disruptions, restrictions, new lockdowns, a virus on the march.

Those of you of a certain age may well remember the early 1990s movie Groundhog Day, in which a television weatherman covering the annual Groundhog Day event in Pennsylvania becomes trapped in a time loop, reliving the same day over and over again.

One can’t help feeling we are going through a similar experience, although Groundhog Day was a comedy, and the current situation – with a new variant sweeping the world – is anything but.

Looking back at the review of 2020, which is always a good way to start of the review of the current year, we titled that article ‘Everything and Nothing has Changed’. In the spirit of Groundhog Day, that title could apply to this year’s review too.

Which isn’t to say that everything has stayed the same, but that change tends to be gradual and incremental, only gathering momentum over time until a tipping point is reached. Differences over the course of a year aren’t really discernible, unless that tipping point is reached, or there is a seismic event which turns everything upside down in an instant.

The pandemic, once the world had woken up to its enormity, was just such an event. It caused rapid changes to the way we work and live and, of course, to the way we pay.

In this context, and looking at our 2020 end of year review, we identified what we saw as the top ten trends of the year for cash, namely: digital payments, access to cash (or rather, lack of it), the war on cash, the fightback, government intervention, growth of cash in circulation, polymer, big data, vanishing coins, the green revolution.

Whilst all remain valid, and ongoing, the two trends where momentum is gathering and real change is beginning to happen are in access to cash (allied to government intervention) and the green revolution.

In terms of the former, the pandemic has resulted in significant changes to the way we pay. Even though change was already happening, it has been turbo-charged by the inescapable inability of being able to transact in cash whilst countries were in lockdown and digital payments were the only option for most.

Less use of cash (voluntary or otherwise) is leading to less access to cash which is leading to the spectre of a failing infrastructure for what is deemed an essential product. In turn, this has turbo-charged responses from central banks to avoid long-term and irreversible damage to this infrastructure, or to devise alternatives that will keep cash available to those who want, and importantly need, it.

Some countries were already taking action to support a less-cash future, undertaking consultations with stakeholders and the public, drawing up plans, passing legislation. That handful has grown substantially – in the last few months alone, we have heard about plans or action from the UK, France, New Zealand, Australia, the Netherlands, Turkey, the eurozone, to name but some. Governments, and their central banks, are realising that, despite being neutral on the matter of payments, they can no longer leave it to the market and that intervention is now necessary.

The other trend has been the green revolution or, to give it is more popular moniker, sustainability.

Again, this isn't new, but what has turbo-charged this topic in 2021, aside from the growing body of evidence that we need to do more and faster to rein in global warming, was the UN’s COP 26 climate conference. As with previous COP summits, the practical agreements and measures agreed failed to meet the hype and expectations, but solid progress was nevertheless achieved.

Sustainability has moved up the corporate agenda, from a ‘nice to have’ to a ‘must have’ for shareholders, investors, customers and the public alike. The cash industry – suppliers and issuers – are already ‘on it’. They have been playing their part in reducing the impact of their operations and products on the environment, and their efforts will only step up over the next and following years.

This may not exactly be a ‘tipping point’ moment, but it’s certainly an area that has gathered huge momentum over the past year, and is set to continue.

We concluded the end of year review last December with the statement ‘as we bid goodbye (and good riddance) to 2020, let’s look forward to 2021, to all its opportunities to keep cash available, secure, safe and useful. Oh yes, and to meeting in person!’ In hindsight, we were somewhat optimistic, but here’s hoping that, by the end of next year, the pandemic has finally run its course. We have all had enough of living in a Groundhog Day world.

On that note, here’s wishing you all the very best for the festive season, and a happy, healthy and (fingers crossed) COVID-free New Year.