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

  • Cash was used for only 14% of all payments in the UK in 2022 (pdf), according to data from the trade body, UK Finance.
  • According to data collected by Which? around 6,000 bank and building society branches have closed since January 2015 across the UK, or are due to close by the end of 2025. This is equivalent to 61% of branches in January 2015.

Who’s affected by the changes?

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In 2022, automated teller machines (ATMs) provided about 90% of the cash withdrawn in the UK.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).

Protecting access to cash

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:

Responses to branch closures

Related to access to cash services is the matter of access to wider banking services. There has been widespread public and political concern and debate about the closure of bank branches and the subsequent effects on communities.

For example, during the passage of FSMA 2023, Labour tabled new clauses enabling the FCA to ensure access to banking services. The Government did not support the clauses, with then Economic Secretary Andrew Griffith MP noting the development of sector-led banking hubs and saying intervening in the market by legislating would not be proportionate. The clauses were withdrawn.

From 2020, the 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.

Post Offices, banking hubs and other provision

Alongside recent legislation to protect access to cash and regulation, the industry has led initiatives to protect access to cash and wider banking services:

Further reading

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