One of the most significant economic and social changes during the Covid-19 pandemic was the acceleration towards the adoption of digital services in both the public and private sectors.
Online meetings via platforms such as Zoom became the norm as did ordering and paying for food via apps on a night out. And as banks limited their services during lockdown, the increase in the use of digital payments for everything from ordering online to tapping a console when paying in a shop continued to grow.
Yet despite all of this technological change, research showed that over 8 million people in the UK (or 17% of the population) still have difficulties living in a cashless society. More relevantly, this issue was not related only to the challenges of Covid as smaller communities across the UK had borne the brunt of the restructuring of the banking sector with estimates that nearly 5,000 branches had been closed since January 2015.
Even prior to the pandemic, dealing with the issue had been recognised through the creation of the Community Access to Cash Pilots. This was an independent initiative, backed by the major banks, consumer groups, and small business groups which has supported eight communities across the UK to trial and test scalable solutions to help keep cash sustainable.
The most important element was the community-focused approach with the eight areas chosen on the basis of the strength of the local leadership willing to lead the work and, more importantly, the need for innovation in cash access in their community.
The different services piloted during the last couple of years included cashback from local shops, automated deposit taking machines for small business to deposit their takings, digital services to make it easier for people to get cash and manage small change, new ATMs and ‘Bank Hubs’, which provided basic banking services and dedicated rooms where customers could see community bankers from their own bank.
Earlier this week, the results of the pilots were released and there were some unexpected results not least that of all the solutions put forward, it was the banking hubs that met the widest range of needs.
Simply put, this is a “common” counter for all banks to offer basic cash services such as withdrawal, deposits and bill payments as well as a space for consultations with individual banks.
But whilst it sounds easy and simple to operate, what was surprising that it had never been tried before mainly because the banks were unable to work with each other. And yet this collaborative approach was an outstanding success with the two communities where this experiment took place even crediting the hubs in keeping retailers viable and supporting the local economy.
Of course, the real question is whether the banks are willing to collaborate on a far greater scale than in these communities but what the pilot show is that sharing infrastructure makes services more sustainable in the future especially as it is likely that demand will be higher in the future.
There were a range of other wins from the initiative including getting the UK Government to change the law so that people can get cashback from shops without a purchase, a simple legislative adjustment something that could be revolutionary in the long term for those managing cash on tight incomes and could be a real alternative to ATMs especially in smaller communities where the local shop is at the heart of the community.
Another key finding was that the main challenge for cash dependent consumers was digital literacy. In fact, the vast majority wanted to be able to use digital banking but simply didn’t know how to do it and understanding how best to provide that learning within the local communities is key to helping people manage their money better,
But the most important finding of the report is that you cannot have a ‘one size fits all’ approach to dealing with this problem with interventions being most successful where they were tailored to the needs of the community and run in partnership with local people.
Simply put, the report concluded that different solutions worked differently in different locations because their needs were different. Whilst it is easy it to commit government resources to have a top-down intervention that is the same in every part of the country, this important study shows that what actually works is an approach that takes into account the different requirements of consumers and businesses.
Just replacing a closed bank with another bank doesn’t necessarily work especially if more practical and effective solutions can do the same thing and meets the needs of the local community.
The Community Access to Cash Pilots was an exercise in showing through real-life interventions what could actually work to make a difference. The real challenge is to get all the different actors to work together to make this happen.
However, if the penny finally drops for the banks to realise that they can provide many of their services in smaller towns through a collaborative approach that benefits everyone, then this could make a massive difference to communities across the UK and, more importantly, to those vulnerable groups that still needs access to cash on an everyday basis.