ACCESS TO CASH IN ITALY

Roberto RinaldiHead of Directorate General for Currency Circulation and AccountingBank of Italy

Europe ATM & Payments Innovation SummitRome, 16 October 2019

AGENDA

1. ITALY: FACTS AND FIGURES

2. THE USE OF CASH IN ITALY

3. THE ITALIAN CASH CYCLE

4. NEW AND TRADITIONAL CASH DISTRIBUTION CHANNELS

5. TRENDS AND NEW MARKET INITIATIVES

6. FINAL REMARKS

1. ITALY: FACTS & FIGURES

Some dataTotal area: 301,338 km²

Population: 60.6 million

Administrative division 20 regions

Tourists 63 million

GDP per capita: € 29,000 EUR

GDP: 1.8 EUR trillion

3

Data at 31/12/2018

Source: Eurostat

1. ITALY: FACTS & FIGURES

Financial sectorBanca d'Italia branches 39+1 HeadquartersCredit institutions (CI): 505Branches of CI: 25,409Poste Italiane branches: 12,750

ATMs: 47,678

ATM per 1,000 inhabitants: 0.8

Source: BdI 4

Data at 31/12/2018

Number Value

79% 54%

Number: 86%

Value:68%

Source: ECB Study on the use of cash by households - SUCH 2016

2.1 USE OF CASH IN THE EURO AREA

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CASH

86%

68%

CARDS

13%

29%

OTHER INSTRUMENTS

1%

3%

CASH

68%

54%

CARDS

29%

39%

OTHER INSTRUMENTS

3%

7%

In Italy cash is more widely used than in

the EU

Source: ECB Study on the use of cash by households - SUCH 20166

2.2 USE OF CASH IN THE EURO AREA

7Source: BdI Survey on Households for Income and Wealth

% of spending in cash 2016

• In 2016 cash is still the most frequently used payment method, especially in South• Use of cash as payment method has been decreasing over time, card possession is growing

2.3 USE OF CASH IN ITALY

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Annual cash withdrawal per inhabitant 2013-18

• South: Stable lower withdrawals / moving from OTC to ATM• Other areas: Reduction of withdrawals, partial substition of OTC with ATM

2013 2018

Source: BdI Statistical Data Warehouse – regional data available from 2013

2.4 CHANGE IN CASH WITHDRAWALS IN ITALY

ATMN. +45,1%€ +60,4%

OTCN. -39,9%€ -48,8%

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Cash In Transit Companies

Credit Institutions

Retailers

ConsumersCRMs

20%

80%

3.1 CASH CYCLE IN ITALY

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35 Branches

Cash in Transit31

Credit Institutions505

47,678

Cash Centers85

38,159

Data at 31/12/2018

3.2 SUPPLY CHAIN STAKEHOLDERS

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35 Branches

Cash in Transit31

Banks & Poste Italiane 505+1

47,678

Cash Centers85

38,159

79.1 bil BN RECIRCULATEDfrom CITs

90.9 bil of €ISSUED from BdI

372.1 bil of € withdrawals from the public

61,9% 31,8%

Data at 31/12/2018

3.2 SUPPLY CHAIN STAKEHOLDERS

Banca d’Italia control powers on Cash Handlersü Lay down regulation

ü Conduct inspections

ü Apply administrative pecuniary sanctions

ü Adopt corrective measures

ü AML sector authority for CIT companies (Implementation of Directive (EU) 2015/849)

12Data at 31/12/2018

3.3 POWERS OF BANCA D’ITALIA ON CITS AND CIS ON CASH RECIRCULATION

13Data BdI

4.1 BANKNOTE DISTRIBUTION INFRASTRUCTURE

2008 2018BdI Branches 79 35

CIT companiesCash centers

68 (2012)

131 (2012)

3185

Commercial banksBranches

ATMs

93834,13950,122

50525,40940,396

POSTE ITALIANE BranchesATMs

13,0315,947 (2009)

12,7507,282

NCBs’ BRANCHES BY COUNTRY (number)

14Source: ECB CIS2, Eurostat

3.4 BCNs branches in Italy and in other European countries

NCBs of Malta and Luxembourg have been omitted from the graph.

4.2 BNCS BRANCHES IN THE EURO AREA

BANK BRANCHES & ATM RATIOS OF EURO AREA COUNTRIES 2018PER 1,000 KM2 PER 1 MLN INHABITANTS

15Source: ECB CIS2, Eurostat

4.3 CIS BRANCHES AND ATMS IN EUROPEAN COUNTRIES

ITALY above the average in all

the cases

Source: BdI Statistical Data Warehouse and Poste Italiane 16

Number of branches every

100.000 inhabitants

2008 2018

4.4 CHANGE IN CIS BRANCHES IN ITALY

Source: BdI Statistical Data Warehouse and Poste Italiane (data available from 2009)

Number of ATMsevery 100.000

inhabitants

2009 2018

4.5 CHANGES OF ATMS NETWORK IN ITALY

BdI CUMULATED NET ISSUANCEVOLUME (billions of pieces) VALUE (€ billions)

5.1 THE IMPORTANCE OF DENOMINATIONAL MIX

From end 2018 -> new policy of Poste Italiane increasing €10 in ATM’s distribution

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Increase of ATMs usage adversely

affects circulationof lower

denominations(5€ and 10€)

5.2 EVOLUTION IN ITALIAN CASH CYCLE & AUTOMATION

BANKNOTES RECIRCULATED (billions of pieces)

BANK’S RECYCLING MACHINES (number)

One commercial bank starts cash in shop in tobacconists.machine guides all operations, with predefined "closed" choices

Possible operations (with some limits):- PAYMENT SERVICES- WITHDRAWALS

In small municipalities this bank uses cash in shop asalternative to ATM or branch

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5.3 NEW WAY TO ACCESS CASH THROUGH RETAILERS

CIT Cash Centers

Cash processing and logistics

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Credit Institutions

5.4 INNOVATIONS IN CASH-HANDLING PROCESS:MULTIBANK CASH CENTERS

BdIbranches

Credit Institutions

Credit Institutions

Credit Institutions

A B

EFFECTS Reduction of transportsfrom/to BdI

Reduction of banknotesstored in CITs caveaus

NEW SUBJECTS

5.5 NEW SERVICE PROVIDERS TO ACCESS CASH

IADIndipendent ATM Deployer

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EFFECTIVE ANSWER TO CONSUMER DEMAND FOR

CASH

SAFE and GOOD qualitybanknotes and MIX

denominationEFFICIENT cash cycle

EFFECTIVE and RESILIENT cash cycleBUSINESS CONTINTUITY

PROMOTION of PROJECTS of cash

handling modernization

6.1 ROLE AND CHALLENGES OF BANCA D’ITALIA

Cash distribution network in Italy is shrinking but is still widespread ascompared with other euro area countries

Cash remains the most common means of payment in Italy and isincreasingly distributed through ATMs

Credit institutions promote branch automation, «proximityrecirculation» and multi-bank cash centres, new cash distributionchannels through retailers

New non-bank players are entering the market (Independent ATM Deployers)

Active role of Banca d’Italia in monitoring market trends and dealing with new initiatives with market operators

6.2 FINAL REMARKS AND FUTURE DEVELOPMENT

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THANK YOU FOR YOUR ATTENTION