How to stop cash from becoming extinct in Britain – why it's important to give money to people

Yesterday Natalie Ceeney, independent chair of the Access to Cash review and chair of Cash Access UK, wrote a piece for This is Money about how ensuring Britain doesn't go cashless has become an issue she is 'addicted to' .

She revealed the first part of what she has learned over the past five years and why access to cash is so important.

Today she talks about the money infrastructure and what needs to be done to help protect physical money in Britain.

Our challenge five years ago was not only to identify the problem, but also to recommend solutions. It was clear that continuing to rely on the market to solve the problem wasn't going to work.

Britain had built an infrastructure for high cash usage, built on the principles of the market economy and with little regulatory oversight.

There were potential points of failure. For example, if a company decided to leave the market, there was a real risk that the entire monetary system would collapse.

If a company that transports cash across the country in secure vans or offers ATMs decides they aren't making enough money anymore, who would fill the ATMs or take cash from retailers?

What would happen if a city had no services at all, if all the banks and ATMs decided to leave? If this is important to society, then we need a change in the model.

Working with the banking industry and consumer groups, we began identifying ways to provide cash access and deposit services that met the needs of the local community, but were also cost-effective for the industry.

In 2021 we set up eight pilots across the UK, testing a range of post office ideas with extra services, cashback at the counter at local retailers and the new concept of a 'Banking Hub'.

It was the Banking Hub that emerged as the key success story. We established our first two in 2021 in Rochford (Essex) and Cambuslang (Lanarkshire) (which are still open today), towns chosen because both towns had lost their last bank branches, and where there was a strong local community that called for action.

For those who don't know, banking hubs are shared spaces where customers of almost all banks can perform basic banking and money services.

They are located in a very accessible place in the local town, usually on the main street.

They have a counter, staffed by a real (and helpful) person to help people withdraw money, make deposits, check their balances, pay checks and other basic services – which the Post Office manages.

In addition to this counter, community bankers from all major banks are present within the Hub on varying days who can help customers with more technical or bank-specific questions, such as powers of attorney or setting up standing orders.

During the pilots, the new banking centers were not only popular and busy, but they also brought life back to the shopping streets.

After the pilots were completed in late 2021, the banking industry collectively agreed to roll them out.

The banks agreed that any location that lost its last branch would be independently assessed by LINK, which could recommend new services including ATMs or banking hubs.

Communities that have historically lost their last settlement could (and still can) also apply for a review. Over the course of 2022, we worked through all the details so that we could get this new approach working.

This was a huge achievement, and just a year ago, in December 2022, we set up a new company to set up and run the new Banking Hubs, called Cash Access UK.

It is a non-profit organization, fully financed by the banks. It is run by a team that combines experience in banking with experience in providing services to communities, and who understands the needs of vulnerable consumers.

Over the past year, Cash Access UK has opened 29 new Banking Hubs, bringing the total to 31 to date (end of 2023). But there are already seventy in the pipeline, and by 2024 about two hubs will be opened per week.

We will support communities across Britain who need cash and banking services.

Banking hubs are created to high standards, often taking an old, unloved shop in the center of the high street and thoughtfully redesigning it, to high environmental standards, but with accessibility at its core.

The Banking hubs may be new, but they are already proving very popular, with more than 90 percent of their customers saying they would recommend them to others.

And unlike the 'last branch in town' they serve virtually everyone, open to individuals and small businesses to all major banks.

At the same time, the government, with cross-party support, quietly passed legislation in June 2023, transforming this initiative from a voluntary initiative to one that is legally required.

Regulators now have the power to set the criteria for which communities receive cash services, and what those services must provide.

The Financial Conduct Authority, the regulator, is currently in public consultation on the details of these rules; their consultation will conclude in February 2024.

The new rules should come into effect in the summer of 2024. These new rules will strengthen the voluntary schemes currently in place, but the current schemes are already strong and working well.

Now each time a bank branch closes, an independent assessment by LINK takes place to determine whether a banking center or other service is needed.

And anyone in a community without a bank branch can ask LINK to assess the needs of their community through a very simple online form.

The banks have also agreed not to close a branch in a city where a hub will be built until it is ready and open.

So, five years later, is the job done?

We have made tremendous progress, but there is still much more to do. Apart from rolling out the hubs as quickly as possible, I would like to highlight two important issues that I don't think we have yet understood.

I would like to see the same focus we have had on cash on giving everyone the choice to use digital services. I do believe in payment choice, and I don't believe we should do away with cash, but using cash should be a choice for millions of people, not just a necessity.

So now that we're finally all behind protecting cash on our high street, and with a banking center likely coming to a city near you soon, how about we all make an equal effort to help everyone participate in our growing digital world? society? After all, everyone will benefit from it.