by Countryside Alliance





Westminster Hall Debate


Financial exclusion and the future of access to cash” Seema Malhotra, Lab, Feltham and Heston


Tuesday 21 May 2019, 9.30-11.00am



·         Sweeping bank closures are being blamed by banks on the lack of usage, with fewer and fewer users going into their local branch and preferring to bank online. However, closures in rural areas, especially in the absence of reliable mobile or broadband connectivity, can present particularly serious challenges.


·         Rural communities are among the slowest to move to digital, often due to limited access to broadband. They also have a larger proportion of lower income, older and more vulnerable users who still prefer, or need, to use cash.


·         Access to money and finance in rural areas is increasingly difficult. 20 per cent of the population live and work in rural areas and yet only 12 per cent of bank branches and 11 per cent of cash machines are located there.[1] This means it is becoming increasingly difficult for people and businesses located in rural communities to access their money, other day-to-day services, and those services necessary to run a local business. Rural communities see an increasingly digital world that only works for those with adequate broadband and mobile connectivity.


·         More than 930,000 households in rural areas live below the Government's official poverty line. As many as 200,000 people living in the countryside do not have bank accounts of any kind and cash remains an important part of the rural economy.[2]


·         Poor public transport systems and long travel times make physical access to mainstream financial services difficult and more costly for people living in rural communities. Getting access to money often means a journey by bus for the many elderly or vulnerable people who do not own a car.


Access to Cash:


·      The closure of retail bank branches is a long-term trend. The 479 branch closures in 2014 (UK-wide) marked a significant increase over previous years and was exceeded in 2015 with 650 closures. Some 124 of the closures during 2014 were the last bank branches in their neighbourhood, particularly affecting rural towns and coastal communities.


·      The personal finance sector is undergoing rapid change, not least with the growth of internet, telephone and mobile banking. However, access to cash remains important for many households and businesses in rural areas.


·      Many consumers still receive a poor fixed broadband experience, with significant differences between urban and rural areas. Ofcom define a decent download speed as 10 Mbps – and in May 2018, about 3 per cent of premises (around 865,000) could not achieve this. While 99 per cent of urban premises can get this performance, only 85 per cent of rural premises can[3].


·      Those living in remote or rural areas can find digital access difficult through a lack of broadband or reliable 4G mobile data coverage. Of the 5.3 million adults who never use the internet, 3.7 million (70 per cent) live in rural areas[4]. For similar reasons, many cannot rely on cards and digital as their only way to pay. While card acceptance is growing, many merchants and retailers are still cash only, especially in remote and rural areas.


·      In black spots, people cannot use the internet from home or from mobile devices. This means no digital payments, no online shopping and, increasingly, no way to use local and national government services. This is not just a consumer issue: businesses need good access to digital networks to operate. From tech start-ups to rural B&Bs, if businesses cannot accept authenticated card payments, they are at an immediate disadvantage. A concerted effort will be needed to ensure that digital payments technology is designed for everyone in society.




·      As cash usage declines, the economics of supporting cash access become problematic. Increasing numbers of ATMs and bank branches become economically unviable, and close, leaving some areas at risk of no/low cash access. This will initially be around the peripheries – e.g. rural or deprived communities. As cash use declines further, the issue will become more widespread. But those who are already the most socially marginalised are most likely to be affected first.


  • ATMs are disappearing at a rate of 500 per month across the UK. The decline was steepest for fee-charging cash machines, but the number of free-to-use ATMs also fell by 388 in the first five months of 2018. The number of overall cash points fell by 2,611 to 66,999 in the same period. The earliest closures of ATMs and branches have been in remote and rural areas because activity levels and volumes tend to be lower than in busy urban areas.
  • The number of ATMs shutting down increased six-fold to almost 1,500 between November 2017 and April 2018, in anticipation of a fee change by Britain's cash point network LINK. These closures will see millions of people who rely on cash in their daily lives struggling through these closures - with severe consequences for many communities and businesses.

·      72 per cent of all cash withdrawn in 2015 was accessed at a cash machine. With 11 per cent of cash machines located in rural areas there is typically good access to ATMs in rural towns, but in villages a quarter of households lived more than two and half miles away. The LINK network runs a financial inclusion programme to plug geographic gaps, where there is no free-to-use cash machine. So far this has targeted deprived areas, which are largely urban.


·      The planned cut in the fees banks pay to operators of the hole-in-the-wall cash dispensers is the driving force behind these closures. LINK is beginning a process of gradually reducing this fee to 20p, which will force many banks and operators to close free cashpoints.


·      LINK has pledged to protect access to cash in rural areas through its financial inclusion programme, which allows an increase in the fee paid in areas where there is only one ATM within a one kilometre radius.


·      Research casts doubt on this claim, suggesting that rural areas have been more harshly affected by cashpoint closures in the past six month and shows LINK measures to protect rural cashpoints do not go far enough. One ATM is rarely enough for a whole village or town. They are machines, they fail and need to be fixed and that could mean people have to travel nine or 10 miles for cash.


Post Offices:


·      The post office network offers an important means of accessing cash, either using its own financial products or because it provides access to the current accounts of 20 other banks and the business accounts of 8 other banks. Half of those who regularly access their accounts at a post office do so because there is no nearby bank branch. The Post Office Card Account also remains an important means of access to cash for those on low incomes. Nationally there are more post offices than there are bank branches (of all the banks combined). Moreover, the post office network has rural reach, since more than half of its outlets are located in rural areas, including a presence in many villages.


·      The number of post office closures has slowed down, with a net loss of 27 rural outlets during the 2014/15 financial year. Almost 99 per cent of the rural population lives within three miles of a post office outlet, comfortably exceeding the 95 per cent target set by Government and the postal regulator, Ofcom.


Countryside Alliance calls for:


·         The regulator to take action to stop further closures of ATMs and ensure that consumers aren't suddenly stripped of their access to cash.


·         Access to Banking Protocol to ensure that when a branch is moved, or closed, customers are made aware of the banking services offered by the nearest post office.


·         The Post Office and banks to standardise the banking services offered over the post office counter.


·         Digital connectivity and skills to be improved to ensure those living and working in rural areas are able to access banking services online.


To download a PDF version of this briefing note please click here


[1] State of the Countryside Update: Financial Inclusion, January 2017

[2] State of the Countryside Update: Financial Inclusion, January 2017

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