Banking directors have claimed there is a “relentless move” towards a cashless society, driven by increased adoption of digital alternatives.
Fergus Murphy, group chief customer experience officer at Virgin Money UK, said that the drive towards online banking is happening across the globe and existing trends have been accelerated by the pandemic.
“With care and diligence the banking environment will move that way - the pandemic has definitely sped up the process - more and more customers have issues around the hygiene of cash,” he told a Scottish Affairs Committee meeting looking into the accessibility of cash in Scotland.
“Obviously footfall in all retail stores and any other type of commercial operation on the high street have reduced significantly,” Murphy told MPs. “The usage of cash is down 70% in the last decade; it hasn't changed the trend-line.”
Carol Anderson, branch banking director at TSB, said: “There was a 40% decline rate in use of cash in the wider business community, so we had to change as well; we haven't seen that decline before”.
The session also heard from Post Office banking director Martin Kearsley, who claimed that it was the “bedrock of cash in the UK”.
In December, the Post Office assisted with £60m in cash withdrawals and £180m in cash deposits, which was roughly split between personal deposits and small businesses.
“In Cambuslang, we significantly grew the cash that was available inside that community - it effectively underlines that if cash stays in a community the community thrives.”
Kearsley argued that this is a “good model” to replicate in order to aid the recovery of the high street post pandemic, adding that such banking hubs let the banks focus “on the evolution of their digital services”, while the Post Office becomes the “bricks and mortar of all those budgeting on cash”.
He added that the Post Office has kept its network above 11,500 branches and claimed it was the only service increasing its presence on the high street.
Kearsley also noted the importance of putting the access to cash into legislation, stating: “Whenever cash comes under threat there should be a legal obligation on those who have provided it to continue to provide and provide alternatives.”
However, he also revealed during the session that the Post Office is removing 600 ATMs from service, as they have become “unsustainable” due to the low transaction level.
Ricky Diggins, community bank business delivery director at Lloyds Banking Group, said that there has been “unprecedented collaboration across the banks” in order to protect access to cash, which led to the pilot scheme of introducing a bank counter at the Post Office banking hubs.
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