Cashless society – what’s in it for the UK?

Cash: soon to be a thing of the past?

The UK passed a major milestone on its journey to becoming a cashless society last year when it was reported that electronic payments overtook their paper counterparts for the first time. According to the Payments Council, only 48% of payments made by British consumers and businesses in 2014 were in cash, down from 52% in 2013. On top of this, a separate survey found that 71% of British customers carry less than £20 in cash at any time, with half saying that they will walk no further than 100 metres to find a cash machine.

So what’s causing this shift in payment habits and how would cashless benefit banks, merchants and consumers?

The death of bank products has been greatly under-exaggerated

Source: Moven

Since 2005 I’ve been predicting the decline of branch banking. For almost ten years I fought bankers who decried my assessment that branches would cease to be the most important channel in banking, to be replaced by far more efficient mechanisms for revenue generation and relationship. Today the discussion is increasingly resorting to a sort of desperate plea — 'but branches aren't going to die completely, are they?' No one is saying branches will grow.

The UK, the US, Spain, and a host of other countries are seeing the lowest number of bank branches in decades. For the UK you’d have to go back 60 years to find lower numbers of bank branches than we have today, and 2014 saw the use of bank branches fall 6% in a single year — the biggest reduction ever.