Bankomat Chief Executive Nina Wenning, questions what constitutes a bank branch in the 21st century. The Swedish shared utility service she heads provides ATM cash access, but since consumers leverage “online e-commerce services and many other digital banking and payment tools,” she wonders “what is a branch in the 21st century? Does it have to be a full-service transactional physical location with tellers?”

Branch and cash usage is declining in Sweden, where there are many online bank and e-commerce options, the RIX-RTGS and RIX-INST real-time payment systems, and the Swish mobile payment solution. The country is also participating in the P27 real-time multiple currency, cross-border payment and trade platform planned for Scandinavia.

Bankomat’s five participating banks — Swedbank, SEB, Danske Bank, Nordea and Handelsbanken — do not have a shared banking hub, instead focusing solely on providing access to cash for their customers and other client banks, in what is a declining cash market that still needs servicing.

Less than 10% of transactions and commerce in Sweden relied on cash last year and that figure is still falling. A 50% reduction to 1,000 ATMs is therefore planned by Bankomat by 2025, with cash depot facilities falling from 16 to just two. According to Wenning, tellers stopped handling cash in Sweden in 2010.

Branches no longer needed

“We did look at providing shared full-service banking facilities, as is envisaged in the U.K., five years ago. But frankly, we decided against it because we don’t believe you need traditional branches anymore,” Wenning said.

“Once people stop going to branches they stop altogether, rarely seeking out an alternative physical location. They instead rely upon online technology, automated contactless payments, ATM banking or cash recyclers (CRs) that can dispense and accept currency. They don’t come back.”

It eventually will be the same with ATMs and CRs, Wenning noted. “Once customers stop using these machines and turn to card, mobile and online options instead, they don’t come back. This is why we’re reducing our ATM estate, while still complying with the recent minimum cash dispensing laws in Sweden.

Advanced technology

The pandemic advanced digitalization still further in Sweden, an already technologically advanced nation. Wenning said she “strongly believes that automation hasn’t reached its peak yet.”

“Automated technology makes things simpler in a fast-paced, increasingly connected world, so of course there are still many many developments to come,” she said. The rise of open application programming interfaces (APIs) and enhanced data sharing are examples of how connected banking, data, payments and e-commerce will coalesce in the future, she said.

Bank Automation Summit US 2023, March 2-3 in Charlotte, is a crucial event on automation technology in banking and will feature a fireside chat with Brinda Bhattacharjee of Goldman Sachs & Co. Register here. Learn more and register for Bank Automation Summit US 2023.