'Cash is hugely important to UK economy'

Change is at sprint speed. In 2011, 55 per cent of UK payments were made in cash. By 2032, only 7 per cent will be in cash.

Just three years ago, the Bank of England estimated that 95.7 per cent of the UK population were within two kilometres of a cash access point; with 99.7 per cent within five kilometres of a cash access point.

Worryingly, in the past five years, as cash payments have declined, nearly 15,000 cash machines have been taken away and more than 2,000 bank branches have closed. The writing is, if not the wall, at least on the computer tablet. 

Now nearly a third of adults are registered for at least one mobile payment service, while 86 per cent of adults used a form of remote banking.

But have we gone too far? Is it time for a pause?  

The end of the local financial adviser?

Artificial intelligence and fintech, robo-advice DIY platforms, and other digital disruptors can be incredibly empowering but the bread and butter of finance, indeed the gold standard, is local personal service, from mortgages to protection, from an experienced and well-qualified financial adviser.

Although advisers work from anywhere (and at any time) many have a high street presence along with lawyers and accountants. And people still like face-to-face advice.

But the loss of cash ultimately means one of the mainstays of the high street – banks – will disappear. Without cash, bricks and mortar banks are largely redundant.  

People in the UK acquire about 93 per cent of their cash from ATMs, with most of the rest coming from bank branches, Post Office branches, cashback and wages, according to a UK Finance report, "UK Payment Markets 2022".

People come to the high street to bank.

They then bring prosperity to all the businesses, including financial advisers, in the area. A prosperous high street means a prosperous back street. Equally, if the high street goes to rack and ruin, more back streets will become slums.

Without cash, people on the margins of society will suffer.

The end of the banks on the high street follows a string of other high street failures: Debenhams, Wilkos and BHS, to name a few example. Now just a few stalwarts remain, including M&S and Nationwide, and the inevitable takeaways. 

The aroma of stinky burgers pervades once fine streets all over Britain. Is this the best a nation of shopkeepers can can do for our health and wellbeing?

The clearing banks are retreating everywhere. In my home town, the NatWest in Wallington in the London Borough of Sutton, is closing its doors in September 2024. Barclays in Wallington high street has already gone. Yet cash is still serves a purpose.

The total number of cash payments made in the UK during 2022 increased to £6.4bn (2021: £6bn).

Importance of cash

Without cash, people on the margins of society will suffer; charity collections are already down, student buskers may be no more, and privacy – not always for nefarious reasons –  will be lost.

According to the Bank of England, which is currently running an exhibition called “The future of Money” until September 2025: “Cash remains a valued form of money for the elderly and those on lower incomes, with many using it to budget and manage their household finances.” 

In July 2022, cash as first preference payment method was most popular among those aged 65-plus, at 27 per cent, and most used by people in lower socio-economic groups.

A 2020 Financial Conduct Authority report found that 46 per cent of the digitally excluded, 31 per cent of those with no educational qualifications, and 26 per cent of those in poor health still rely on cash to a "great or very great extent". 

Some people with physical and cognitive disabilities also find other payment methods difficult to use (they may struggle with pin numbers or passwords, for example).

Even those who do not use cash on a day-to-day basis find it valuable. Just 35 per cent of respondents in July 2022 thought they could go more than a month without cash. 

Cash is a great budgeting tool, too. When your purse is empty, that’s it.

No defences against hackers and ‘bugs’

The cashless society has already gone too far.

Within the past week, I could not buy a sandwich at London Bridge Pret because the tills were down.

A fortnight ago at White Stuff on Cowes High Street on the Isle of Wight, high winds and tide led to floods disrupting the computer system, not to mention 400 items of damaged clothing. I paid on card but the receipt was handwritten. 

A month ago, I could not buy groceries in Sainsbury and on a busy Bank Holiday, Gails Bakery in Greenwich probably lost most of an entire day’s custom because the internet was down. It certainly lost my custom. 

Could the disappearance of banks spell the UK’s economic doom?

Similarly, at a heaving Fumo’s Italian restaurant in St Martins Lane, in London’s West End’s theatre land, I was treated to lunch. The internet was down, cash-only payments were taken. My host had no cash. I had cash. It wasn’t quite the treat I had been expecting!

Multiply that lost business – just five personal incidents by 50mn individual experiences from the population at large, then it is all too stark just how much business is lost by killing off cash. At the very least, have a viable Plan B.

I virtually never print out any financial records, I rely on banks and so on to get it right. Now I am not so sure. Are we all too reliant on fintech? I dread to think if we went totally cashless and paperless, what hackers and criminals could do to disrupt UK plc.  

Learning from history

The reconstruction of banks was hugely important in Germany’s post-war economic recovery.

My late father, then a serving RAF officer in Germany after the war in both Cologne and Berlin, told me despite the destruction of life and homes, top priority (sometimes even before providing housing) was given to rebuilding the banks and the economy. This led to an almost miraculous German post-war boom.

Today, could the disappearance of banks spell the UK’s economic doom?

Cash plays a key role in society, both as a medium of exchange to connect buyers and sellers, and as a store of value. Do we want to kill off a proven tool of commerce?

Without  banks on the high street, cash will become a historical relic. Worse still, the high street, mainstay of civilisation for a millennium or more, will be no more. 

Keep physical money, with its concomitant ecosystems of brick and mortar banks. Banks and cash must remain for now the twin pillars of a thriving high street.  

Stephanie Hawthorne is a freelance journalist and former editor of Pensions World (1989 to 2017)