UK moves to protect cash, despite rapid shift to digital

02 Sep 2021

As the move to cashless accelerates across the globe, fuelled further by the coronavirus pandemic, the UK is continuing to take steps to protect paper money.
Digital payments are increasing, central banks around the world are contemplating whether to issue digital currencies, yet with more banks and ATMs disappearing in the UK, are there risks of leaving physical cash behind too rapidly?
Around 10% of Brits are still using cash on a daily basis, with the elderly and poorest in society particularly reliant on fiat currency. Indeed, the rapid spread of so-called ‘cash deserts’ has caused chaos throughout the country. As such, to offset the sharp drop in banks and ATMs, an independent initiative has been set up - Community Access to Cash Pilots – backed by consumer groups, banks and small business representatives, involving a program of ‘banking hubs.’

Britain protecting cash

Banks throughout the UK have been closing branches at lightning speed as part of cost cutting measures, and as more customers use banking apps. The number of ATMs has also been diminishing for several years.
The fall in the usage of traditional currency has skyrocketed as a result of the Covid crisis, driving a meteoric rise in online shopping. As such, as an increasing number of businesses will refuse to accept cash, this will put more pressure on society’s most vulnerable who are unable or uncomfortable going online for financial services.
The ‘banking hubs’ are the fruit of a partnership between the UK’s Post Office – providing a service for basic cash requirements – and the five biggest nearby banks. This way, banks can save on overheads, whilst customers have access to a broader range of financial institutions. This pilot program was due to come to an end in October “but the Access to Cash Action Group has decided to extend the Hub pilots until at least April 2023 – giving banks and local communities more time to test new innovations, adapt services to meet people’s needs, and build insight to inform effective solutions for the long term,” says a UK Finance report.
Natalie Ceeney CBE, independent Chair of the Access to Cash Action Group said of the program: “We can already see the positive role the Hubs are playing in revitalising these local communities – providing essential banking services for individuals as well as a boost for local businesses. Extending the pilots gives us more opportunity to really understand what works for people, and what role services like these could play in the future. These are early steps, and over the coming months the Group will explore a wide range of options to protect access to cash.” 
John Glen, Economic Secretary to the Treasury added: “The government brought in new laws to make it easier to offer cashback without a purchase earlier this year and it’s great to see the industry taking advantage of these. The next step is to get this innovative new solution rolled out to shops in our local communities to protect access to cash for the millions of people who rely on it.”

Declining cash usage

Programs such as these ‘banking hubs’ highlight how officials across the globe need to launch other such initiatives over the next few years as cash usage falls further. Central banks, including the Bank of England are considering the adoption of digital currencies to ensure they can continue to support customers as the number of digital transactions grows.
A report by the Bank for International Settlements earlier this year said about digital currencies: “Central banks around the world are investigating a rich set of prototypes,” which could help decide which technologies are best for a CBDC (central bank digital currency) and how and whether they should be rolled out to the public.