Evaluating the Critical Factors towards a Cashless Society: Maltese Banking Sector Perspectives

Abstract

After the financial crisis in 2008, there has been a notable increase in cashless transactions, as well as significant improvements in structures and mechanisms in the banking sector. Accordingly, this study seeks to analyse the opportunities and threats in the local banking sector emanating from the pressure to move towards a cashless society. Malta is a country stepped in traditions with the European Central Bank report (2016) stating that Malta is the cash capital of the EU, leading the list of countries where most transactions are effected directly in cash. In coordination with other institutions, governments are moving from cash-based to a cashless system by introducing online facilities to their citizens, such as the online portals, whereby citizens can execute online payments. in order to increase efficiency in handling financial transactions and decrease costs. This has led to the idea of a cashless society. This study assesses several aspects within the Maltese banking sector focusing on the trend towards a cashless society. Through semi-structured interviews held with managerial employees within banks operating locally, the researchers analyse the level of understanding, the pre-requisites required, the stumbling blocks to be removed and all the advantages and disadvantages that banks are experiencing to reduce cash transactions and make the move towards a mostly cashless society. The key findings from this study include a unanimous confirmation from all the banks interviewed that education is the most important element at this stage. A shift in culture and mentality is also required to ultimately lead towards higher accountability, transparency and less frauds. The main concern among the bank representatives interviewed for this study, is the lack of liquidity for banks. The benefits derived from a cashless society are various, and outweigh all the costs and burdens. This study found out that all the banks are in favour of a cashless society. However, some of the banks are adopting a more conservative style where they await the core banks to make the first move; since their moves tend to be regarded as a drop in the ocean, when compared to strategies adopted by core banks, locally.