Like other developed nations, the UK is moving closer and closer to a cashless society – but this is not an entirely smooth process, as a recent outage demonstrated, and not all members of the public are entirely on board with the changes.
In this context, one of the country’s financial regulators, the Financial Conduct Authority (FCA), has outlined a plan to ensure continued consumer access to cash. This comes in the form of requirements for banks and building societies, coming into force on 18 September, with the government selecting 14 firms to deliver the new system.
Financial institutions will need to assess cash access and understand if additional services are needed, when changes are made to local services and to respond to local residents, community organisations and representative groups.
Bank customers will be able to request an assessment of gaps in local cash access, and banks will be queried to deliver what the FCA calls ‘reasonable additional cash services’ when significant gaps are found. Facilities such as bank branches and ATMs will need to be kept open until additional cash services are identified.
The plan comes a few weeks into the new government administration under the Labour Party, which won a sweeping victory in the UK general election on 4 July. The party had been vocal about the importance of local banking services before and during electoral campaigning.
Sheldon Mills, FCA Executive Director of Consumers and Competition, said: “Three million people continue to rely on cash, even as digital payments become more popular. And many small businesses still need somewhere to safely deposit their takings each day.
“That’s why we’ve acted quickly in response to new powers given to us by Parliament to ensure reasonable access to cash withdrawal and deposits is maintained.”
The UK was well on the way towards transitioning from a predominantly cash-oriented society to a more digital one throughout the 2000s and 2010s. As with other countries, the COVID-19 pandemic of 2019-2022 accelerated this significantly.
According to the latest figures from UK Finance, card transactions accounted for 51% of UK payments in 2023, and use of contactless methods is rising. However, it is important to note that cash remains the second most widely used payment method in the country.
Some banks have also noted that, despite the closure of various branches due to a shift towards online services, cash remains consistent. For example, Nationwide detailed that cash withdrawals were up in an update earlier this year.
Regardless, it is hard to deny that retail banking is shrinking in the UK. Nationwide may be keen on maintaining a high-street presence, but most retail banks have recognised that consumers are for the most part moving towards digital alternatives.
This has left some gaps in cash access for some customers. This is what Labour, particularly its Chancellor of the Exchequer, Rachel Reeves, has voiced concerns about in the past, citing a need for communities to be able to access banking services.
The FCA believes that gaps can be filled in a number of ways, such as banking hubs and Post Office facilities – these are two areas Labour highlighted in its plans for community banking hubs when in opposition – as well as ATMs, including deposit ATMs.
