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People are relying less on both physical cash and traditional bank branches:

Who’s affected by the changes?

While such changes reflect wider economic trends, the independent Access to Cash Review highlighted the risks to millions of people of “sleepwalking” into a cashless society. Research by the Financial Conduct Authority (FCA) in 2022 found that the digitally excluded, older people, people in poor health, those with lower financial resilience and those with lower financial capability depend more on cash.

In 2019, the FCA identified similar groups as being most likely to be affected by bank branch closures. Many small businesses also depend on physical branches, according to a report from the Federation of Small Businesses in 2016. The Scottish Affairs Select Committee reported in 2019 that whole communities – especially in rural areas – are affected when the last branch in a community disappears.

Threats to the future of cash

In 2022, automated teller machines (ATMs) provided about 90% of the cash withdrawn in the UK. But the number of free-to-use ATMs has fallen over recent years, partly because fees payable to machine operators have reduced. Those operators have often responded by introducing pay-to-use ATMs.

Although there have been attempts to remedy that trend, the National Audit Office warned in 2020 that providing ATMs could become uneconomical, leading providers to withdraw. But the number of pay-to-use ATMs has also fallen since 2019.

Many businesses and traders have also moved towards non-cash payments. This could also threaten the future of the cash distribution industry (pdf).

Responses to branch closures

There has been widespread public and political concern about the closure of bank branches and the subsequent effects on communities. Successive governments have acknowledged the concerns but maintained that these are commercial decisions that it would not intervene in.

From 2020, the Financial Conduct Authority (FCA) has published guidance setting out expectations for banking providers that intend closing or reducing branches, services or free ATMs. It expects the provider to analyse the effect, communicate with customers, and support them to find alternative provision.

A new focus on protecting access to cash

In recent years, wider policy and political discussion has focused more generally on the future of access to cash than on branch closures.

In 2019 the Access to Cash Review called on Government, regulators, financial services and others to work together to “keep cash viable for the foreseeable future”. Government and regulatory responses have since referred to and build on the review’s recommendations:

Post Offices, banking hubs and other provision

Further reading

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