HappyAlex - stock.adobe.com
The UK financial services regulator will be given new powers to ensure people can still easily access and deposit cash, as the digital revolution decimates branch and ATM networks.
The government will legislate for the Financial Conduct Authority to ensure banks allow consumers to access cash and make deposits within a reasonable distance from their homes.
While the distance has not been set, legislation will be introduced to Parliament as part of the Financial Services and Markets Bill.
“To support the FCA, the government will in due course set out its expectations for a reasonable distance for people to travel when depositing and withdrawing cash,” said a statement from the Treasury.
The announcement this week that Lloyds Banking Group was closing another 28 UK branches was just the latest in a constant flow of closures and job cuts. Lloyds Bank, like many other traditional players, cites changing customer habits and their migration to digital banking channels as a major driver of bank closures.
The migration to online banking channels was accelerated during the Covid-19 pandemic, when branches were forced to close due to lockdown restrictions and people lessened their use of cash in a bid to avoid physical contact with other people and possessions. This change resulted in many people choosing to continue using digital services even once restrictions were lifted.
For the first time in their long histories, banks face stiff competition from numerous challengers that use digital technology to serve customers at a fraction of the operating costs of traditional banks. As a result, the traditional banks are investing heavily in technology and reducing their physical infrastructure.
Read more about bank branch closures in the digital age
- Sweden’s Handelsbanken to cut branch network by nearly half but will invest heavily in IT to offer digital alternatives.
- HSBC closing a further 82 branches as Covid-19 pandemic reinforces its strategy to move customers to digital channels.
- Co-operative Bank to rely more heavily on digital channels as 18 more branches.
Economic secretary John Glen said: “Millions of people across the UK still rely on cash, particularly those in vulnerable groups, and today we are delivering on our promise to ensure that access to cash is protected in communities across the country.
“I want to make sure people are still able to use cash as part of their daily lives, and it’s crucial to ensure that no person nor community across the UK is left behind as we embrace a more digital world.”
The Treasury said cash is the second-most frequently used method of payment in the UK, with 5.4 million adults “relying on cash to a great extent in their daily lives”.
In December 2021, consumer rights champion Which? called for a pause in bank branch closures amid fears that people could be left without easy access to cash and services.
Figures released by the consumer rights organisation at the time revealed that since the beginning of 2015, banks and building societies had closed or scheduled the closure of 4,734 branches in the UK, and an average of around 60 UK bank branches were closed in every month of 2021.