As the company accelerates into its digital future, the UK is taking action to protect the age-old technology known as paper money.
Digital payments are quickly becoming more mainstream, so much so that even central banks around the world are debating whether to issue an electronic form of money to the public. But increasingly cashless Britain, where many bank branches and ATMs have disappeared, has become a reminder of the risks of leaving physical money too quickly behind. Some 10% of Britons still use cash for all or most of their daily purchases, and the poor and the elderly can be particularly dependent on them.
The spread of currency deserts has sparked an uproar in communities from Wales to Scotland, and authorities have sought ways to bolster physical infrastructure that is becoming obsolete but still vital for many people and businesses. To counter a sharp drop in the number of bank branches and ATMs, Community Access to Cash Pilots, an independent initiative supported by banks, consumer groups and representatives of small businesses,started a program of “banking hubs” in April in a city in Scotland and another in the east of England.
How the UK protects cash
Banks in the UK have been closing branches at a rapid pace to cut costs as more customers depend on the apps, and the number of ATMs has also been declining for years.
The decline in the use of physical money has accelerated around the world during the Covid-19 pandemic, as more buying and selling takes place online and businesses try to maintain the socially distant and sanitary transactions. As the infrastructure of physical currency disappears, it can fuel a worrying cycle: more companies will refuse to accept money because processing takes longer and is more expensive. This can put pressure on the elderly and other vulnerable people who are uncomfortable going online, or cannot go online, for financial services.
The UK hubs are the result of a partnership between the country’s Post Office, which offers over-the-counter service for basic cash needs, and the five largest neighboring banks, which take turns providing staff . By sharing real estate, banks can save money on overhead costs, while locals could gain access to a wider range of financial institutions. The pilot was due to end next month but has been extended at least until April 2023.
Experiences like UK banking centers show that managers will need to get creative in the years to come as cash usage declines. Central banks, including the Bank of England, are studying digital currencies to ensure they can still support the public as more transactions go digital. But on the other end of the spectrum, hard cash has properties that can’t be reproduced electronically: they’re anonymous, don’t require a bank account, and still work in the event of a power outage.
A large bank said half of its customers who used the redemption service could be considered vulnerable. “We can already see the positive role that Hubs are playing in revitalizing these local communities – providing essential banking services to individuals as well as a boost to local businesses,” said Natalie Ceeney, Independent Chair of the Access Group. to Cash Action, in a press release. declaration. “The driver extension gives us more opportunities to really understand what works for people.”