Europe

Cash crisis warning as 5,000 banks shut with 200 more to go next year

Martin Lewis discusses bank account switching deals

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Which? analysts pointed out that already more than 200 extra bank and building society outlets are due to shut next year as the move to digital finance gathers pace.

And experts warned that thousands of people who rely on notes and coins for everyday shopping, and to help manage their budgets, will be left struggling.

They have urged officials at the Financial Conduct Authority to help safeguard walk-in outlets where customers can obtain actual hard currency.

Which? research found 5,162 bank and building society branches have closed since January 2015, and 206 are set to shut in 2023 – meaning dozens are disappearing each month as customers go online.

Rocio Concha, director of policy and advocacy at the consumer organisation, said: “The shift to paying digitally has made life more convenient for millions.

“Yet there remains a significant minority for whom cash is still vital as they are not ready or willing to make that switch.

“Those who rely on cash need protection from bank branch and ATM closures.”

She added: “We must not sleepwalk into a situation where cash users struggle to make purchases or are excluded from certain services.”

The move away from physical cash had started even before the pandemic led to contactless payments being encouraged to try to halt the spread
of Covid.

But ATM operators Link stressed that £80billion has been withdrawn from its hole-in-the-wall machines this year alone as customers continue to find uses for cash.

Graham Mott, director of strategy at Link, said: “Despite all the talk about the death of cash, it is worth reminding ourselves of how important it is.

“Compared to 2021, the number of transactions this year is up around five per cent. Year-on-year we’re also seeing people take out more cash when they visit cash machines.”

Ross Borkett, head of banking at the Post Office, said: “Our data shows many more families on low incomes are turning to cash to budget in light of cost-of-living increases and the added financial pressures in the run-up to Christmas.

“It also remains critical that local businesses can deposit their takings easily in their local branch to maximise the time they can spend trading during these challenging times.”

Lord Holmes, a financial inclusion campaigner and vice-chair of the all-party Parliamentary group on financial technology, said: “Since Covid, we’ve seen a big shift towards digital payments and wider digital services. But what happens if they become digital-only? Payments is a good example.

“For some businesses, it makes complete sense, but others are becoming cashless because it is problematic to get to the bank.”

Trade group UK Finance’s data shows 1.1 million people use mainly cash for day-to-day shopping. A spokesman said: “Cash payments decreased by 1.7 percent last year. We expect cash usage to continue to fall.” Hard currency is tipped to account for six percent of all payments by 2031.

The spokesman added: “The industry is committed to preserving access to cash for those who need it, including through banking hubs, free ATMs, enhanced Post Office services and cashback. Whenever a branch closes, Link independently assesses local cash access needs and will commission any new services required.”

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