CONTINUING IMPORTANCE OF CASH IN SPAIN: CLOSURE OF BANK OFFICES AND ACCESS TO CASH Concha Jiménez Director General Cash and Branches ATM & PAYMENTS. INNOVATION SUMMIT Madrid 18 October 2018 DIRECTORATE GENERAL CASH AND BRANCHES
AGENDA 1. SPAIN: FACTS AND FIGURES 2. USE OF CASH IN SPAIN 3. NETWORK OF CASH DISTRIBUTION 4. CLOSURE OF BANK BRANCHES IN SPAIN 5. ALTERNATIVE CASH ACCESS CHANNELS 6. FINAL REMARKS AND CHALLENGES DIRECTORATE GENERAL CASH AND BRANCHES 2
1. SPAIN: FACTS & FIGURES SOME DATA Total area: 505.944 km 2 Population: Regional Government: Tourists GDP: GDP per capita: 46,5 millions 17 // 2 autonomous cities of Ceuta and Melilla 82 millions 1,2 EUR trillions 25.000 EUR Data at 06/09/2018 DIRECTORATE GENERAL CASH AND BRANCHES 3
1. SPAIN: FACTS & FIGURES FINANCIAL SECTOR Banco de España Branches: 15 + 1 Head courters ADS Centers (NHTO): 46 Credit institutions (CI): 204 Branches of CI: (*) 27.706 ATMs: (*) 50.839 ATM per 1.000 inhabitants: 1,1 Recirculation of banknotes: (**) 7.990 millions Banknote per inhabitant: (**) 43 Data at 31/12/2017 (*) Data recorded in February 2018 (**) Own estimation DIRECTORATE GENERAL CASH AND BRANCHES 4
2. USE OF CASH IN SPAIN 2.1 The volume and number of euro banknotes continue to increase 2.2 Cash as the most commonly used form of payment in Spain in 2017 2.3 Main sources of cash DIRECTORATE GENERAL CASH AND BRANCHES 5
2. USE OF CASH IN SPAIN 2.1 The volume and number of euro banknotes continue to increase Annual growth of euro banknotes in circulation: 6,1% Euro banknote circulation Euro banknote circulation and GDP [Source ECB Currency Information System and Statistical Data Warehouse] [Source ECB Currency Information System] *Annual percentage change, monthly data, EUR billions *In percentages DIRECTORATE GENERAL CASH AND BRANCHES 6
2. USE OF CASH IN SPAIN BdE Survey 53% 41% 2.2 Cash as the most commonly used form of payment in Spain in 2017 5% What is your most commonly used payment method? CASH DEBIT CARDS CREDIT CARDS 2017 data Downward Trend ECB Study 79% 19% 2% Number of transactions at POS CASH 87% PAYMENT CARDS OTHER INSTRUMENTS 11% 2% DIRECTORATE GENERAL CASH AND BRANCHES 7
2. USE OF CASH IN SPAIN ECB Study Spain 2.3 Main sources of cash Main sources of cash Cash withdrawals at ATMs and POS purchases Friends 8% Money kept at home 8% Bank counters 8% Others 12% Via "cash-back" 2% ATMs 61% TRANSACTION AMOUNT 160.000 140.000 120.000 100.000 80.000 60.000 40.000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 miio 2017 9,5 Average value of cash transactions in Spain vs 12,38 in Euro area Cash withdrawals from ATMs: - Higher in aggregate amount - Steady in number PURCHASE TRANSACTIONS AT POINTS OF SALE CASH WITHDRAWAL TRANSACTIONS AT ATMs [Source: BdE] DIRECTORATE GENERAL CASH AND BRANCHES 8
3. NETWORK OF CASH DISTRIBUTION 3.1 Impact of the 2008 crisis in Spain 3.2 Changes in the number of bank branches in Spain 3.3 Changes in the number of ATMs in Spain 3.4 Comparison of branches and ATMs with those of other European countries DIRECTORATE GENERAL CASH AND BRANCHES 9
3. NETWORK OF CASH DISTRIBUTION 3.1 Impact of the 2008 crisis in Spain Banking consolidation Number of banks -28% Adjust capacity Reduce costs Rationalisation of the network & Compensatory measures: Reduction of the branch network Reduction of number of ATMs Expansion of off-site customer service centers IMPROVE EFFICIENCY DIRECTORATE GENERAL CASH AND BRANCHES 10
3. NETWORK OF CASH DISTRIBUTION 3.2 Changes in the number of bank branches in Spain Evolution the number of branches in Spain from 1974 to 2017 Maximum value -39% in 10 years [Source: BdE] Number of bank branches 2008 45.662 2017 27.708-17.954-39% - 937 branches in 2017 DIRECTORATE GENERAL CASH AND BRANCHES 11
3. NETWORK OF CASH DISTRIBUTION ATMs are the main source from which consumers obtain cash: 3.3 Changes in the number of ATMs in Spain Number of ATMs in Spain 2000-2017 Number of ATMs 2008 61.714 2017 50.839-10.875-18% [Source: BdE] DIRECTORATE GENERAL CASH AND BRANCHES 12
3. NETWORK OF CASH DISTRIBUTION 3.4 Comparison of branches and ATMs with those of other European countries (I) Number of bank branches and ATMs in the euro area [Source: ECB] [Source: ECB] 2008-2017: -54.000 branches in EU-28 (-21%) 2017: -6.000 branches (183.000) France: highest number of branches and ATMs Spain and Italy: high number ATMs 2017 data DIRECTORATE GENERAL CASH AND BRANCHES 13
3. NETWORK OF CASH DISTRIBUTION In 2017: Bank branch ratios of euro area countries [Source: ECB, Eurostat] 3.4 Comparison of branches and ATMs with those of other European countries (II) ATM ratios of euro area countries [Source: ECB, Eurostat] DIRECTORATE GENERAL CASH AND BRANCHES 14
4. CLOSURE OF BANK BRANCHES IN SPAIN 4.1 Municipalities in Spain affected by region 4.2 Municipalities in Spain affected by population density 4.3 Branchless municipalities in Spain in 2017 DIRECTORATE GENERAL CASH AND BRANCHES 15
4. CLOSURE OF BANK BRANCHES IN SPAIN 4.1 Bank branches by region Change in number of branches in the period 2008-2017 Number of bank branches by region in 2017-2550 4.518 ANDALUSIA -4059 3.945 CATALONIA -2538 3.504 MADRID -2295 2.771 VALENCIA REGION -1050 2.042 CASTILE AND LEON -917 1.564 GALICIA Spanish regions not affected uniformly -459-624 1.556 1.368 CASTILE-LA MANCHA BASQUE COUNTRY -723 1.077 ARAGON -536 929 CANARY IS. -297 910 EXTREMADURA -523 833 MURCIA -429 826 BALEARIC IS. -300 666 ASTURIAS -206 510 NAVARRE -174 336 CANTABRIA -183-7 -3 314 19 18 LA RIOJA CEUTA MELILLA [Source: BdE] DIRECTORATE GENERAL CASH AND BRANCHES 16
4. CLOSURE OF BANK BRANCHES IN SPAIN 4.2 Municipalities in Spain affected by population density Number of bank branches in municipalities by population tranche Spanish municipalities not affected uniformly [Source: BdE, INE] DIRECTORATE GENERAL CASH AND BRANCHES 17
4. CLOSURE OF BANK BRANCHES IN SPAIN 4.3 Branchless municipalities in Spain in 2017 Spanish population not affected uniformly 4.109 municipalities branchless out of 8.124 (50%) 540 more than in 2008 1.249.407 inhabitants affected 2,7% of the Spanish population No financial exclusion: use of on-line banking [Source: BdE, INE] Population at risk: Elderly people living in rural areas DIRECTORATE GENERAL CASH AND BRANCHES 18
5. ALTERNATIVE CASH ACCESS CHANNELS 5.1 Compensatory measures 5.2 Map of alternative cash channels in Spain 5.3 Overall map of national coverage of cash services in 2016 DIRECTORATE GENERAL CASH AND BRANCHES 19
5. ALTERNATIVE CASH ACCESS CHANNELS 5.1 Compensatory measures (I) Mobile branches Post Office network Financial agents Cashback CITs Multi purpose ATMs Off-site ATMs DIRECTORATE GENERAL CASH AND BRANCHES 20
5. ALTERNATIVE CASH ACCESS CHANNELS 5.1 Compensatory measures (II) Approx. 690 mobile branches Survey of BdE of services offered by CI (Dec 2016) Mitigation measures in place 609 municipalities with ad hoc cash services Can we estimate the impact? 502 municipalities with offsite ATMs Approx. 966 municipalities with financial agents, off-site bank employees or CIT Companies DIRECTORATE GENERAL CASH AND BRANCHES 21
5. ALTERNATIVE CASH ACCESS CHANNELS 5.2 Map of alternative cash channels in Spain (I) Coverage of cash services by bank branches Coverage of cash services by off-site ATMs Source: [BdE] DIRECTORATE GENERAL CASH AND BRANCHES 22
5. ALTERNATIVE CASH ACCESS CHANNELS 5.2 Map of alternative cash channels in Spain (II) Coverage of cash services by mobile branches Coverage of cash services by branches on an ad hoc basis Coverage of cash services by agents and off-site employees Source: [BdE] Implementation in different geographical areas DIRECTORATE GENERAL CASH AND BRANCHES 23
5. ALTERNATIVE CASH ACCESS CHANNELS Overall map of national coverage of cash services 5.3 Overall map of national coverage of cash services in 2016 Population density 3.402 municipalities not have any cash access 913.682 inhabitants affected 1,96% of the Spanish population [Source: BdE] Dynamic maps DIRECTORATE GENERAL CASH AND BRANCHES 24
6. FINAL REMARKS AND CHALLENGES Euro cash in circulation continues growing Cash remains to be the most common means of payment in Spain Spain has a significant number of branches and ATMs per inhabitant and per 1.000 km2 The reduction of bank branches in Spain has impacted to 2,7% of the Spanish population Several alternatives have been developed to provide cash (mobile branches, ad hoc services, ) These facilities reduce the population with no access to cash in its town or residence to 1,96% This map continues changing (ex.: cash-back, agreements to use the Post Office network ) https://www.bde.es/f/webbde/gap/secciones/publicaciones/informesboletinesrevistas/revistaestabilidadfinanciera/18/mayo/articulo_jimenez_tejero_en.pdf DIRECTORATE GENERAL CASH AND BRANCHES 25
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