I am in the middle of finalising the 2024 Transaction Banking Awards, which is filled with global, regional and pan-continental projects to make moving cash from one bank or one corporate to another cheaper, quicker and easier. The ongoing work to digitise global transaction banking is a never-ending feast.
However, the idea of “cash” is also a moving issue. As a store of value, is it worth more digitally or physically? On your phone in an app, or in your back pocket, ready to hand it over to a merchant to the chiming of a cash register? Be careful how you answer that, and what your definitions of value and accessibility are.
This week, HSBC pledged not to close any more bank branches in the UK until at least 2026. The bank has closed 743 branches in the past few years, but allocated £50mn to refurbish its remaining 327 branches. The HSBC announcement comes after the UK’s Financial Conduct Authority launched its new access to cash rules at the end of July. Under the new guidance, 14 designated banks and building societies will need to determine if the local communities they operate in will lack access to cash services, like branches and ATMs, if they were to close their physical branches. Any gaps would need to be filled by the banks themselves.
Reading about the protection of “cash” when it is used by people who keep it in a pocketbook is odd — especially in the context of writing about our awards and the long fight for digital, when “cash” is high value and travels through various supply chains, currencies and bank networks.
I get it. According to the bank-funded non-profit Cash Access UK, up to 6mn adults in the country say they rely on cash in their day-to-day lives. But physical branches are expensive to operate and sparsely visited. Since January 2015, 6,058 bank branches, or 61 per cent, have closed. So far, there have been 410 closures scheduled across 2024, with 61 more been pencilled in for 2025, according to independent consumer group Which?.
Anna Roughley, head of insight at the Lending Standards Board, argues that “Many customers choose banks with in-branch services as these can help with their specific access needs, or can support those, like small businesses, who need flexibility in how they engage with the financial services sector.”
This is all true; however, digital or online solutions aren’t failsafe and the lack of physically accessed banking services — especially in rural areas — is an issue that has actual consequences. I’ve written before about how the empty space once held by human bank tellers and envelopes of cash isn’t replaced by a digital utopia — it just remains empty.
I continue to wonder, where is the digital offering, where is the better solution to the banking deserts that have formed? Are so-called “banking hubs” — which are just glorified ATMs — really the answer? What about hijacking rural postmasters to moonlight as de facto branch managers? After all, according to the recent “Digitise or Die” report from MoneyHub, where 2,000 UK consumers were surveyed, 50 per cent said that “they wanted better access to financial products and services without physically visiting branches”.
Andrew Martin, CEO and founder of SMEB, which provides payment services for rural small businesses, thinks that the FCA’s move to protect cash access “is long overdue”.
However, he adds, that while “the only acceptable standard is easy and reliable access to banking services in every town across the UK”, the FCA should also be looking at how it can “bring in the private sector to support their efforts”.
There used to be a joke in banking circles that it was cheaper and faster to put a bag of cash on an aeroplane than it was to transfer funds across borders. This year’s Transaction Banking Awards tell the story of the work global banks have been doing over the past few years to offer a better solution that makes the movement of cash faster and cheaper, and removes the need for an inflight meal. I want to see a better solution offered to customers who deal in cash amounts that run to the hundreds and thousands, and not just those who deal with the millions and billions.
The Banker’s Transaction Banking Awards will be announced in the magazine’s September issue.
The article is available here.