We have all known for some time that bank branches are closing around the country, but our latest research shows that, in Scotland, the drip-drip of closures has become a tide. The impact on our communities should not be underestimated.
Bank of Scotland was established in 1695, RBS in 1727. These institutions have been woven into the fabric of national life for hundreds of years and bricks and mortar bank branches have been part of the glue that keeps communities together.
The necessary trip to the bank to deposit cash from the business or sort out the family finances was often an opportunity to do some shopping and catch up with friends doing the same thing.
If a bank branch closed, at least cashpoints were available to plug the gap – providing easy access to money so people could continue to shop, eat in local restaurants and join clubs, societies and other community activities.
However, the last year has also seen a surge in ATM closures. Which? research has shown that 290 cashpoints closed across Scotland last year – the vast majority of them free-to-use machines.
This double whammy of branch and cashpoint closures has caused great inconvenience to many customers and ripped the heart out of towns and villages, leaving small businesses across Scotland fearing for their futures.
Which? recently heard from Susan Young, who owns two sweet shops in the Highlands. She said local people felt their voices weren’t listened to when RBS decided to shut a busy branch in Aviemore. Now there are long queues and the town’s remaining cashpoints are often emptied quickly when the town is packed with tourists – costing businesses valuable trade. Susan fears that any further reduction in banking services could be a devastating blow to her business and tourism in the town.
This reduction in access to cash is particularly damaging for the 2.2 million people – many of them elderly or vulnerable – who rely on cash for all their day-to-day transactions. For many of these people, being cut off from easy access to cash effectively means being cut off from society. For others the potential consequences are even more serious.
We spoke to one woman who was in an abusive relationship. Her husband was emotionally manipulative and took control of her finances, running up huge debts in her name. The situation got so bad that she tried to take her own life.
She eventually escaped, but only by stashing small sums of cash away, until she had enough to pay for a place to stay. For her, having access to cash really was the difference between life and death.
If cash use continues to decline at its current rate, Britain could be cashless by 2026. But as these cases show, some people will never be able to make that leap to a so-called cashless society. We have to protect them.
This is not about protecting cash at all costs, but about ensuring people retain the ability to use their preferred payment method.
There is no doubt that technological advances have brought new ways to pay that have enriched people’s lives and card payments overtook cash as the UK’s most frequent payment method for the first time in 2017.
But at the moment, public support for a society without cash does not match the enthusiasm of some banks and payment service providers. More than 25 million people across the UK say they would face “real challenges” without cash and Which? research found seven in ten (68 per cent) Scottish consumers would feel negatively about going completely cashless.
The problem is that, currently, radical changes to the banking landscape are happening in an unplanned and uncontrolled way. Banks can shut busy branches despite widespread opposition from local people and businesses, and a flawed scheme to change how Britain’s biggest ATM network is funded was waived through by regulators, despite clear warnings that it could lead to the wave of closures we have seen. Cash is also a vital backup while digital banking and payment systems remain so vulnerable to failure. Which? recently revealed thatb British banks have been suffering an IT shutdown every day. Among these incidents, a computer systems failure at TSB last year saw 1.9 million people locked out of online banking – leaving them struggling to pay bills or make business payments.
Meanwhile, a Visa outage in June left people unable to make card payments or withdraw cash, briefly sparking chaos across Europe and demonstrating that it’s not just banks that are vulnerable.
There is also the issue of patchy broadband and mobile connections preventing people from joining the digital payments revolution in the first place. In Scotland almost two million adults do not use online banking and our broadband speed checker shows Scotland has some of Britain’s slowest connections – with six areas enduring average speeds lower than the 10Mbps minimum download speed proposed under the UK Government’s universal service obligation (USO).
A review into access to cash, carried out by former financial ombudsman Natalie Ceeney, published earlier this month, was a much-needed wake-up call – warning that Britain’s cash system is “on the verge of collapse” and calling for cash access to be guaranteed for all, including those in remote and rural areas.
We are pleased to have the Scottish Government’s backing for our call to go a step further – for UK ministers to give a single regulator a statutory duty to protect access to cash and build a sustainable cash infrastructure. We will be setting out why we believe that is the right course of action at the UK Parliament’s Scottish Affairs Committee today.
It’s now over to Westminster to show it is ready to take action to ensure we do not sleepwalk into a no-cash society – and risk leaving millions of people behind.
Gareth Shaw is Which? head of money.