The chief executive of UK Finance has defended decisions by banks to close half of Scotland’s branches and thousands of ATMs, arguing they were responding to “consumer demand”.
David Postings argued that research showed that cash demand had fallen, with only 17% of transactions now using notes and coins, down from 50% five years ago, which was “much quicker” than the banks anticipated.
“We are responding to consumer demand - it's dropping - and I don’t think that is going to change,” he stated. “Cash usage is definitely falling; it hasn't recovered since the pandemic - so a lot of that infrastructure is uneconomic and what we are setting out to do is protect access to cash by working together with the government and regulators.”
The statements were made during a Scottish Affairs Committee session on access to cash, alongside Richard Cooper, executive director of marketing at Cardtronics; Adrian Roberts, chief commercial officer at LINK; and Richard Piggin, head of external affairs at Which?
Postings explained that UK Finance, the industry body which counts more than 300 banks as members, chose to use LINK, the group that connects banks with ATMs, as “independent arbitrators”.
A new scheme will see LINK being notified of when a bank is “slated to close”, so it can look at the area and community and decide what type of cash access is required - be it a Post Office, cash back without purchase, ATM, or a shared bank hub.
Postings said: “I drove this piece of work because I recognised that vulnerable customers do need to be looked after - there is still a large amount of the population that still budgets in cash - rural economies in particular and some suburban economies.”
He noted that the lack of demand in cash usage meant “the commercial reality is that many bank branches just don’t make sense anymore and indeed many ATMs don't”.
Postings referred to data produced by the Financial Conduct Authority (FCA) to back up his arguments, stating that 95.5% of the population live within a mile or quarter of free cash access, while 99.7% live within three miles. In rural areas 98.3% live within three miles of cash access.
However, Richard Cooper of Cardtronics - the world's largest ATM operator - argued the statistics don’t reveal the reality of the situation, arguing there was “room for improvement”.
He stated: “The statistics show a large majority of the population is within one mile of cash access, but the lived experience is much different from that.”
He pointed out that the figures don't take into account where a cash machine is placed, such as across a “busy road, or waterway”.
Piggin of Which? explained that 53% of Scotland’s bank branches have closed in the last seven years - leaving 486 open, with 545 of the 1,040 banks closing - which is much “greater than any other UK nation”.
He added that 20% of Scotland’s free to use ATMs have closed and the impact on Scotland is “particularly acute” due to poor broadband and mobile coverage, with some having to travel 80 miles to get to their closest free-to-use ATM.
Only 4% of Scottish consumers don't use cash anymore, 11% use cash almost everyday and around 30% use cash at least once a week, Piggin added.
Chair of the Scottish Affairs Committee, Pete Wishart, questioned Postings on whether the rate of bank and ATM closures would see the UK eventually become a cashless society.
“I don’t think we are anywhere near a cashless society - certainly the banks aren’t pushing for a cashless society - what they are trying to do is respond to the demand, which has dropped,” he said. “Cash usage will be with us for a long time to come, but something needs to be in place that provides the flexibility to provide cash access to people and at the same time not be a massive burden economically.”
Postings revealed that 54% of the population use mobile banking and 72% of the population uses online banking, meaning there are still some people not using the services, but argued it was growing “quite rapidly”.
Adrian Richards of LINK noted that cash withdrawals in Scotland fell by 52% since 2018, which was the “sharpest decrease in the UK”, with the average at about 49%.
Meanwhile, a Which? survey of more than 2,000 people found just 16% are aware of the cashback without purchase scheme, and among those who are aware, 31% have used it to access cash.
Nearly half (46%) of those questioned said they are unlikely to use the service, with a quarter of these thinking it will not be convenient.
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