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Access to cash is vital to protect the most vulnerable from being digitally and financially excluded

3 min read

First, they closed bank branches, then they closed cash machines, then they questioned the point of cash itself, then they didn’t financially serve us. Our streets, and millions of people, have been 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. Covid has also seen hundreds of thousands of people open trading accounts to invest in the stock market or the latest digital currency.

If we sit back and let these trends continue without taking action, 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, rightly, be able to rely on traditional banking services, including cash

It is clear that the future is digital, and I am enthusiastic about that digital future, but there are a considerable number of people that should, rightly, be able to rely on traditional banking services, including cash. According to recent figures from the Financial Conduct Authority, 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 believably, shops willing to take cash. Since lockdown, one in five consumers have been blocked from paying with notes and coins.

The government are taking steps in the right direction. Earlier this year, my amendment to the Financial Services Bill (now 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. 

This is already taking shape across the country, not a complete solution, but certainly an important part of what will be required to ensure that people who rely on cash, our communities, our economy does not follow cash off a cliff edge for want of collective action. More positive work is being done with the Community Cash Pilots. 

Building on this, it is essential that the government enshrine these principles in law and legislate for a universal service obligation for the provision of cash and designate our cash network as Critical National Infrastructure.

I will be raising exactly this point in the Lords today when I ask the government what plans they have (1) to designate the United Kingdom’s cash network as Critical National Infrastructure, and (2) to introduce a Universal Service Obligation for the provision of cash.  

What can we learn from Covid? We know that technology, 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.  It will be that combination of talent and technology, inclusion and innovation which will enable and empower.

Cash conceptually and practically still matters, for financial inclusion, for the underlying resilience of our economy it is critical that it receives this governmental support.


Lord Holmes is a Conservative peer. 

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