Banking industry commits to supporting access to cash

UK Finance and the largest retail banks and building societies have made five commitments to continue to preserve access to cash for consumers and businesses over the long term. The financial institutions which have signed up for these commitments are Barclays Bank UK plc, Coventry Building Society, HSBC UK Bank plc, Lloyds Banking Group, Nationwide Building Society, NatWest Group plc, Santander UK plc, and TSB Bank plc1.

This move provides certainty that cash access will be available for individuals and businesses to both withdraw and deposit cash, now and in the future.

The commitment means that cash will be available for those who need it, particularly small businesses, the elderly and vulnerable when they need it supporting the Community Access to Cash Pilots. Working together to consider possible models for future access to cash that address changing access requirements and meet the needs of customers and communities. Protecting current critical infrastructure until a viable alternative is available and establishing and maintaining a framework to enable early identification of potential cash ‘cold spots’.

According to UK Finance’s Payments Market report, an estimated 9.3 billion cash payments were made in 2019. Research from the University of Bristol shows that people currently find it easy to access cash near the places where they use it, like retail hubs2. The research shows that consumers currently already use a variety of different ways to access cash, including ATMs, cashback and the Post Office, with 95 per cent of the UK’s high streets having free access to cash within 250 metres and all having free cash access within one kilometre.

Last month saw the launch of the independent Community Access to Cash Pilots3, first established by the industry, which is supported by the major banks, consumer and SME groups, the Post Office, and LINK. The Pilots are supporting eight communities across the UK to trial and test different ways to allow people access to cash.

The pilots will run for the next six months, during which time we will establish an Access to Cash Action Group which will develop industry proposals for how access to cash could be protected in the long term. This group will be chaired by Natalie Ceeney CBE, Chair of the Community Access to Cash Pilots Board, supported by David Postings, CEO of UK Finance, as Deputy Chair and will include senior members from each financial institution named above, Age UK, Toynbee Hall and others including the Post Office and LINK. The Group will contribute to ensuring that access to cash needs are addressed both now and in the future. Economic insights from the pilot solutions will feed into the design of possible models for future access to cash. Any future solution will be led by what customers want and informed by the findings of the pilots.

David Postings, Chief Executive at UK Finance said “The banking and finance industry is committed to making sure there is access to cash for those who need it as we recognise that cash is still an important way to pay for many. It is fantastic news that the government have moved swiftly to allow cashback without purchase which, alongside other initiatives, will help customers who might be less confident using other types of payments.”

Natalie Ceeney CBE, Chair, Community Access to Cash Pilots Board said “Over 5 million people across the UK are dependent on cash, as are many small businesses and communities. However, as cash use declines, the banking infrastructure is becoming unsustainable, risking individuals and communities being left adrift. I welcome the commitment from the banking and finance industry to sustaining cash, and look forward to working with them, with regulators and government to finding a sustainable model for cash.”

Sarah Coles, Personal Finance Analyst at  Hargreaves Lansdown said “The bank branch network has been imploding for years, but the pandemic picked up the pace, and piled pressure on the industry to protect people who need face-to-face banking. It looks increasingly like the solution isn’t going to involve maintaining branches as we know them, but as they die away, the banks will offer new alternatives on the high street.”

“The closure of bank branches is a vicious circle. The more that close, the more people move online, so there are fewer people relying on high street branches, so more of them close.”

“The pandemic picked up the pace around this ever-decreasing circle, closing more branches temporarily and causing online banking to spike. The low interest rate environment that we’ll need to recover from the pandemic will make matters even worse, because banks find it harder to make money, and so they’re looking to cut costs by closing more branches.”

“Today, the FCA and the banks have issued statements pledging to make sure people will still be able to access cash in future. We know the regulator won’t insist branches simply stay open, because it has chosen to issue guidance putting the ball in the banks’ court – saying they need to help their customers move online or make sure there’s a local alternative.”

“They’re experimenting with what these alternatives will look like. Banks are trialling shared branches, with counter services run by the Post Office, self-service deposit points, and meeting rooms that the banks will take it in turns to use. They’re also trialling cashback schemes in local shops and cash collection services.”

“The end may well be nigh for the traditional bank network, but there will be life for banks on the high street even after the death of the branch network.”