Revolutionising cash management

White Label ATMs (WLAs) are automated teller machines which are managed and operated by non-banking entities. Unlike traditional bank operated ATMs, WLAs enable customers to perform banking transactions such as cash deposits, withdrawals and bill payments regardless of which bank the client has an account with. When doing a transaction there is a minor fee charge mainly for card insurance and transaction facilities. The main aim of WLAs is to foster financial inclusion and expand ATM networks in various areas.

The adoption of WLMs presents a strategic opportunity to reduce South Africa’s annual cash-in-transit (CIT) costs, currently estimated at between R15 billion and R20 billion. Implementing WLAs will reduce CIT costs, as armoured trucks will no longer need to service multiple ATMs at different locations. Instead, they can focus on a single, centralised ATM, streamlining the cash replenishment process and cutting down on transportation expenses and improving cash handling efficiency. This, however, goes far beyond simply saving billions of rands; it also eliminates the need for countless annual trips across South African roads, which has far-reaching benefits. Therefore, these savings would not only enhance the efficiency of the cash handling process but also contribute to sustainability efforts.  

Fewer trips would contribute to sustainability efforts by lowering fuel consumption, reducing emissions and decreasing the wear and tear on the country’s roads and infrastructure. This would ultimately support environmental goals while driving operational efficiency. Fewer trips could also mean less exposure from a security perspective. With fewer trips, the CIT vans would be exposed to fewer security risks leading to less vulnerability in the overall operation. By cutting down on the resources needed for cash transportation, WLAs could help create a more sustainable, cost-effective and future proof financial ecosystem.

The size of the current cash in transit market in South Africa and where it is expected to go over the coming years

The annual expenditure on physical cash-in-transit (CIT) services in South Africa is estimated to range between R15 billion and R20 billion. This figure is expected to remain relatively stable in the coming years. While inflation is projected to drive some increase in costs, this will likely be balanced out by a continued decline in cash usage across the country. Both inflation and reduced cash dependency are anticipated to fluctuate within a range of 4%–6%, ensuring that the overall spending remains largely consistent in the face of shifting economic conditions. As cash usage declines, due to technological advances, it's expected that the demand for CIT services will also gradually decrease, mitigating some of the cost pressures tied to inflation. However, this sector will continue to be a significant part of South Africa's financial ecosystem in the foreseeable future. This trend suggests that banks can start to strategically reduce reliance on costly cash-handling operations, to set themselves up for future success.

If implemented effectively, WLAs could cut CIT expenditure by up to 50%, unlocking savings of R5 billion to R10 billion annually. These funds could then be redirected into high-growth and high-impact areas such as digital banking infrastructure, financial inclusion initiatives and customer-centric innovations.

Cash has increasingly become a "commodity-like" product for South African banks—essential yet undifferentiated. In the current economic landscape, the expense associated with cash management is often regarded as a “necessary evil”. However, this cost burden does little to set banks apart from one another. Instead, it represents an ongoing operational expense that offers little to no competitive advantage. South African banks allocate a significant share of operational budgets to CIT and cash management. In this context, we believe the funds allocated to cash-related activities could be better utilised elsewhere, potentially driving more value for the institutions. The movement of physical cash from one place to another, while essential for the functioning of the financial system, creates little to no economic value. As a result, it generates a significant inefficiency in the South African market, diverting resources away from higher-value opportunities. This inefficiency presents a key challenge for banks that rely on physical cash as a core aspect of their operations.

Furthermore, cash, as a product, offers little differentiation in today’s market. It does not provide a competitive edge for banks but serves as an enabler for other products such as financial products and services that generate higher revenue and profit for banks compared to handling cash. Despite its inherent costs, cash remains a vital part of the broader banking ecosystem. However, it’s becoming increasingly clear that banks could benefit from collaborating by adopting WLAs to reduce these operational costs, ultimately allowing for reinvestment into more impactful initiatives.

When isolated as a standalone product, cash handling is often either a low-margin endeavour, a break-even operation, or, in many cases, a loss leader—a reality we’ve observed across the industry. By rethinking the approach to cash management, banks have an opportunity to significantly reduce costs, streamline operations and direct resources toward areas that drive more value, such as digital transformation, customer experience enhancements and sustainable financial practices. 

Moreover, global trends indicate that reducing cash dependency can lead to improved financial stability and resilience. In Sweden, where cash transactions account for less than 9% of all payments, banks have experienced notable efficiency gains, with operating margins improving since 2015. While South Africa remains far from achieving similar levels of digitisation, even a modest shift could yield substantial financial and operational benefits.

The banks are likely to experience the primary benefits from reduced CIT expenses, especially in the short term. By lowering the costs associated with physical cash handling, banks would be able to retain more of their resources, which they could reinvest into their operations, enhance profitability and streamline services.

Banks might benefit directly in the following ways. These benefits would range across multiple dimensions and include:

Although banks are expected to be the main beneficiaries of white labelling ATMs, benefits are likely to extend far beyond that. Consumers will directly benefit in the following ways:

The key focus is how to foster a collaborative effort among a wider range of stakeholders across the country, creating a platform that encourages banks to reinvest their savings into initiatives that benefit society. These could include promoting financial inclusion, reducing cash dependency, enhancing cybersecurity and supporting sustainability projects. The impact will largely depend on how much of the savings are directed toward these social initiatives, as opposed to being kept within the banks' own operations.

While banks will likely see immediate benefits, there is a significant opportunity for them to drive lasting social and economic change by strategically reinvesting these savings. If the focus shifts toward initiatives that promote broader economic growth, the long-term advantages could extend well beyond the banks themselves.

The funds saved from reducing cash handling costs could be strategically reinvested into areas that benefit both the South African economy and its social fabric:

Adopting WLAs may significantly enhance the banking sector's efficiency and reach, as it will provide substantial benefits not only to banks but also to South African consumers. WLAs will reduce the reliance on CIT services and lower operational risks and costs associated with transporting cash. Eliminating non-value-adding activities and redirecting those resources into high-impact areas could be highly beneficial, not only for banks but also for the South African consumers and society. By prioritising social initiatives such as financial inclusion, sustainability and local community development, these reinvestments could drive long-term economic growth, reduce social inequalities and modernising the banking sector. However, the extent of these benefits depends on the collaboration between banks, service providers, regulators and technology providers. If savings are reinvested wisely, South Africa’s financial system can become more efficient, inclusive and future-ready.