First, they closed the bank branches, then they closed the cash machines, then they questioned the point of cash itself, then they didn’t financially serve us. Our streets, left high and financially dry.
Banks and cashpoints were already closing pre-Covid. The pandemic has accelerated five years of reductions into one. Covid has led to the culling of more than 6,000 ATMs, usage across the LINK network has fallen by 40 per cent and branches continue to be no more. More than 500 have closed over the past year and we should expect more to follow suit.
This is not just decline, it is also divide. In city centres like London or Glasgow the pandemic has seen ATM withdrawals collapse by as much as 80 per cent whereas in parts of Liverpool and Bradford the fall was only down by about a quarter.
On the other hand, the use of banking apps has soared. Unbelievably, people are more likely to have a banking app on their phone than a social media app: Like that. Covid has also seen hundreds of thousands of people open trading accounts to invest in the stock market or the latest digital currency.
If nothing is done millions will find themselves effectively shut out, digitally and financially excluded. It is clear that the future is digital, but there are a considerable number of people that should be rightly able and enabled to rely on traditional banking services, including cash. According to recent figures from the financial regulator, the FCA, it’s about five million.
If we do nothing, then some of the most vulnerable members of society — those most reliant on bank branches and cash — are likely to be left without free ATMs, bank branches or, barely believable, shops willing to take cash.
The government are taking steps in the right direction. Last month my amendment to the Financial Services Act allowing cashback without purchase came into force. This change has the potential to provide free access to cash on every high street, in every cafe and pub, even without a bank branch or ATM.
More positive work is being done with the Community Cash Pilots. It would be positive if they built on this commitment by making our cash network part of our critical national infrastructure and legislating for a universal service obligation for cash provision.
Today (19th July) in the House of Lords I asked the Government just that:
*Lord Holmes of Richmond to ask Her Majesty’s Government what plans they have (1) to designate the United Kingdom’s cash infrastructure as critical national infrastructure, and (2) to introduce a universal service obligation for the provision of cash.Oral Questions, House of Lords, 19th July 2021
The Minister, Baroness Penn, responded by reaffirming the Government’s commitment to preserving access to cash. The Minister also reminded us of the open consultation that is seeking views on the government’s legislative proposals for protecting access to cash. The consultation opened on July 1st and closes at .
I went on to ask:
“My Lords, would my noble friend agree that the future of financial services is digital, that future must be inclusive, accessible and empowering and at least until that future, cash still matters and it matters materially to millions.”
What can we learn from Covid? We know that technology and social and economic connectivity matters. We know that community matters. It is clear that cash still matters and it matters materially to millions. We will transition to digital but that transition must be led by human relationships and our digital problem-solving potential.
A version of this post was originally posted in The Times, Red Box, We can’t afford to let cash die a death.
Lord Holmes: we must guarantee access to cash, Which? 19th July 2021
Cash access is just as important as post, utilities and broadband, says Age UK, The Independent, 26th June 2021.