Cascade Commentary

December 2020

By Dr Emma Black

The consolidation of the banking sector witnessed from the sixties onwards gave birth to the big six providers that dominate high streets of major cities today. During this time, competition and consumer choice were gradually eroded. As the global financial crisis hit in 2008, the big six providers streamlined their operations, reducing their regional presence and in turn closing many branches and ATMs.

According to the British Retail Consortium, there are 10,000 fewer cash machines available today than in 2017 and 3,000 fewer bank branches than in 2015. Despite this, 17% of the UK population – over 8 million adults – have stated that they would struggle to cope in a cashless society.

Small businesses have voiced concern in the last few years around the challenges they are facing in handling cash as local branches have gradually closed and cash charges have increased. Those living rurally have also shared concerns that the modern digital world is leaving them behind.

For many UK adults, cash is not a choice and remains a necessity. Data suggests that the most vulnerable in society are most at risk in a cashless universe, with poverty the biggest contributor to a dependency on cash. 4% of those surveyed in the Access to Cash Review outlined that cash is crucial for them as they rely on others to buy essential goods and items for them.

This has been highlighted during the coronavirus pandemic as the elderly, vulnerable, shielding and sheltered communities have shared their reluctance to give their card details to third parties. Instead, they prefer to give cash to friends and neighbours who are then able to make essential purchases on their behalf.

LINK, the UK’s largest ATM network, reported a decline in the use of ATMs over the last few years with more pronounced differences in London and the South East. In early 2019, 8.7% fewer cash withdrawals took place in London than the same time the year before. While the North East shared in seeing a year-on-year decline, it was to a much lesser extent with a decline of 3.7%. Year on year, figures have of course been lower in 2020 and as we begin 2021, transactions continue to be significantly below pre-pandemic levels.

As the UK and the world looks to recover lost ground over the next few years, it's plausible to consider that the move to a cashless society could be earlier than thought. Regional MPs are speaking up seeking provisions to protect the access to cash for the most vulnerable. They cite the lessons from Sweden which has seen a rapid move to a cashless society as cash transactions fell by 80%. Their switch was considered so rapid that millions were left financially excluded. 

With the stakes high, we look to our Regional MPs to protect the access to cash for the most vulnerable and to our entrepreneurs for innovations to help cushion the impact.