The future of cash in an increasingly cashless society
- Matthew Ball
If you’ve not been overwhelmed by the level of media coverage of Brexit in the past week, then you may also have noticed a fair bit of coverage surrounding the “The Access to Cash Review”, which last week published its final recommendations after an 8 month consultation with over 120 organisations, and thousands of individual consumers , exploring the question: is Britain ready to go cashless? It was everywhere in the newspapers last weekend, featured heavily on various news and current affairs programmes (including The Now Show) over the past week; the fact politicians and regulators have been giving lots of speeches on it as well (despite the small matter of Brexit) clearly shows what a big issue this has become.
So why all the sudden interest? Well, as the Review reveals “ten years ago, six out of every ten transactions were cash (63%). Now it’s three in ten (34%). And in fifteen years’ time it could be as low as one in ten” Moreover, according to the Bank of England, in 2017, digital payments became more used than cash for the first time and so we clearly need to be prepared for a world with less cash usage.
However, as the Access to Cash Review acknowledges, 2.2 million people are completely dependent on cash in the UK, and cash is likely to remain a significant part of the landscape for years to come.
The Review’s action plan to protect cash access calls for:
- Government and regulators to step in urgently to ensure cash remains viable
- A “Guarantee to Cash Access” for all, including those in remote and rural areas
- Those providing essential services to be required to allow consumers to pay by cash
- A more efficient, effective and resilient wholesale cash infrastructure to ensure that cash remains viable as its use declines.
The Review panel concluded that if we approached this issue at the right time; if government, regulators and industry work together, we can keep cash viable so that we don’t leave people behind. But only if we take action now. Cash can no longer just be seen as a commercial issue it is a matter for public policy. And it issued “a call to arms”, stating that it will need everyone involved in the system – government, regulators, the Bank of England, retail banks and consumer groups – to work together to take forward our recommendations.
The Review also claim that they have developed recommendations, which work for everyone. Consumers can be offered digital payment services which work for the whole of society alongside a guarantee of cash access. Retailers should be able to continue to offer payment choice, underpinned by a model which the retail banks can afford to continue offering.
The Bank of England reacted first to the Review stating that they would bring together industry and regulators to work out how they can reform the UK’s wholesale cash infrastructure to make it more efficient and cost effective for everyone.
Charles Randell, Chair of the FCA, in welcoming the Review this week, said that “it’s right we plan for a range of future outcomes, and that there’s a broad social debate about financial inclusion in a digital age. Mobile banking, cashless transactions and a range of other technological developments may mean a wonderful life for some people. But we mustn’t forget that for some time to come, others will need access to cash or bank branches.”
Professional bankers – like the 32,000 members of the Chartered Banker Institute, share a positive social purpose that goes beyond more than simply maximising shareholder returns, supporting individuals, businesses and communities in the UK, so we encourage you all to share your knowledge and expertise; study the review and see how you can contribute to the debate.
Matthew Ball, Head of Public Affairs, Policy & Communications - Chartered Banker Institute