Scenario Planning for the Future of Cash in Israel
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Scenario Planning for the future of cash in IsraelOrientation: The central bank in Israel is thinking about phasing out the physical currency in Israel. They want to have a clear idea of possible scenarios and prepare for the same.Driving Forces: The main driving forces behind the future demand for cash in Israel includes-The rise of alternate payment methodsThe attitude of common peopleRetailer preferencesActions of stakeholders like the commercial banks and other financial institutionsActions and intervention by the GovernmentSocio-Economic developmentScenario Creation: The first two points can be clubbed as “Advanced payments method and people’s attitude.” The first two points would mostly drive the third point; so we can ignore that from our consideration. The last three points are interlinked with each other, and we can club them as “Political and Social Economic condition.”These two uncertainties are combined in a 2×2 matrix and a scenario framework is plotted out. [pic 1][pic 2][pic 3][pic 4][pic 5][pic 6][pic 7]The resulting four scenarios are as follows-The Booming FutureIn this scenario, everything will be perfect in favour of a cashless economy. The technological advancement will offer attractive payment options and people will have a positive mentality towards the change. Besides the socio-economic growth will be favourable and the government as well as the financial institutions will be pushing people for digital transaction.
Stuck in BarrierIn this scenario, we consider the possibility of technological advancement for different digital transaction methods and positive attitude from common people toward digitalisation. But the socio-economic condition doesn’t support for the move. The economic situation doesn’t support for a move towards digitalisation. The government put different regulations and taxes over digital transactions and as a result the financial organisations are also against the moveOnly Push but no PullThis scenario presents the opposite situation of the second one. There might be full Government and regulatory support for a digital economy but the common people aren’t ready for the digital methods. There might be fear in people’s mind regarding the security assurance of online transaction, they might not have confidence on the limited digital options available or they might not like the available service. There might be possibility of lack of awareness or technical education in common people leading to uneasiness in using advanced digital payment method.Hopeless for CashlessThe hopeless situation will occur in case everything acts against our anticipation., like both the negative part from second and third situations. Imagine a situation where there is not enough technological advancement for payment methodologies or lack of technological awareness in people leading to resistance for change. Besides the Government and regulatory bodies also put different restriction over digital transaction making it more difficult for people as well as other financial institutions. In that case, there is no future for a cashless economy.