Are We Digitally Ready for a Cashless Britain?

Are We Digitally Ready for a Cashless Britain?

Carl Uminski

COO & Co-founder at Somo

Views 1347

Are We Digitally Ready for a Cashless Britain?

23.05.2019 12:45 pm

Economists estimate that only eight per cent of the world’s money exists in the form of tangible coins and notes; the rest is floating in the digital ether. According to a survey by Forex Bonuses, Britain is third in the world league table of cashless economies behind Canada and Sweden, respectively. Today in the UK, cash is used in 34% of payments. But banking lobby groups predict this will shrink to just 16% by 2027.

As we edge closer towards becoming a cashless society, its important to appreciate the risks involved being so reliant on technology for our money. Every form of non-cash-based payment instrument is reliant on technology to some extent – even access to cash needs an ATM! It’s clear that smarter technology is the answer for protecting future-proofing payments, and ensuring we’re moving in the right direction when migrating to digital.

Sweden is an interesting (and extreme) case. Like London’s own transport systems, Stockholm’s metro and buses are cashless. But unlike here, Swedish shops and pharmacies can refuse coins and notes, and its expected half of Swedish shops are expected to stop accepting notes and coins by 2025.

But for a country that’s pioneered living without cash, they are now are urging citizens to stockpile coins and banknotes in case the country’s move towards a cashless society leaves them without money in a cyber-crisis. In this modern digital age, power outages, mass computer glitches, cyber-attacks, and even terrorism don’t seem like inconceivable events. And this move will no doubt sound alarm bells in the UK and across the world for other nations to re-evaluate just how significant their reliance on technology really is.

Transitioning away from physical currency in favour of cashless solutions such as contactless cards and mobile payments certainly has palpable benefits; improved security for consumers, less physical cash to handle, and fewer security measures for commerce and banks.

At Somo, we recently conducted research on digital banking in the UK and the future of finance, polling 1000 adults. 63% of UK banking customers prefer to interact with their bank online however when asked about the idea of a cashless society, 43% felt either or somewhat negative.

It’s important we avoid sleepwalking into this cashless world that alienates large sections of society – our older generation and those on low incomes who rely on bank branches and cash. According to Which?, by the end of this year nearly 1,100 UK bank and building society branches will have closed since the start of 2018. They’ve also discovered that free-to-use cash machines are disappearing at a rapid rate, with nearly 1,700 machines starting to charge for withdrawals in the first three months of this year. When communities are stripped of free access to cash, we are hitting the most vulnerable in our society the hardest.

That’s not even taking into consideration how today’s technology also excludes other vulnerable customers; some touchscreen and chip-and-pin pads cannot be used by the blind and visually impaired.

Bank of England figures show that 2.2 million people are almost entirely reliant on cash. But it’s estimated that more than eight million of us would struggle to cope in a cashless British society.

MP Nicky Morgan, put it simply: “Financial inclusion of vulnerable customers…should be of the utmost priority for financial services providers, the government and financial regulators”.

Technology has already transformed banking for millions of people – but it has an even greater potential to empower those who are being left behind. In an increasingly cashless society, we need to ensure there are such adequate financial services for all demographics, both consumers and retailers alike.

When the time comes, and cash is redundant, unbanked individuals will need to have access to useful and affordable financial products and services that meet their needs.

Technological progress should ultimately only ever be measured by efficiency and benefit to the consumer; providing affordably simple, frictionless ways for consumers to pay.

Latest blogs

Ian Bradbury Fujitsu UK

UK Finance's UK Payment Markets Report - Comment from Fujitsu

Over the past months, businesses have had to rapidly move away from physical cash in order to provide consumers with a safer service. However, this data shows us that a gradual movement away from cash in society started long before the Read more »

James Turner Turner Little

Protecting yourself against a recession

The coronavirus outbreak has spread to businesses, leaving many around the world counting costs. Notoriously, known as the Great Lockdown, it’s been affecting the world economy since early this year. The predicted recession is considered to be the Read more »

Alan Cole JHC Financial

Every Cloud: Covid-19 and the opportunity for digital transformation

Faced with tighter regulations and changing customer needs, over the last decade Wealth Managers have not had it easy – but with the development of new technologies, many have been able to create efficiencies, reduce costs and shrink operational Read more »

Nabeel Irshad Mastercard

Two sides of the same coin: Financial and digital inclusion

The issue of how to tackle financial inclusion has long been a part of the conversation in banking and financial services circles. Regulations have ledto the UK’s biggest banks having to provide ‘basic bank accounts’ to cater for those who do not Read more »

Alex Malyshev

The Biggest Danger to Branchless Banking

With a third of the global population on lockdown and scores of bank branches closed, many are convinced that branch banking is dead, and the future is branchless. Is this really true? Branchless alternatives like Revolut, N26, Monzo, and NuBank Read more »

Related Blogs

Bobby Gill GCWealth
Christian Wiens Getsafe

Why Challenger Insurers Are Doing Better Than Challenger Banks During the Coronavirus Crisis?

The 2009/10 financial crisis hit insurers much less than banks. Challenger banks such as Monzo, Revolut, Starling Bank and N26 took advantage of the increasing scepticism and dissatisfaction of customers. With their promise of "no bullshit banking" Read more »

Shaun Puckrin Global Processing Services (GPS)

Balancing Innovation and Regulation: FinTech Trends and Challenges

The financial services industry has been ruled by traditional banks for decades, but with the financial crash in 2008, regulation and microinspection paved the way for younger and more innovative competitors, leading to a new era of challenger banks Read more »

Liam Huxley Cassini Systems

Cassini Commentary: UMR Implementation One-Year Delay

As our clients and firms across the buy side begin to process the recent BCBS and IOSCO recommendation to delay by one year the implementation of phases 5 and 6 of the uncleared margin rules (UMR), we wanted to share why Cassini Systems supports Read more »

Huw Kwon Cognizant

Entity v process: The collective power of AI

Most, if not all, financial institutions are exploring how the range of new and emerging technologies collectively known as artificial intelligence (AI) can improve their performance across a range of activities and processes.  AI offers methods and Read more »

Free Newsletter Sign-up
+44 (0) 208 819 32 53 +44 (0) 173 261 71 47
Download Our Mobile App
Financial It Youtube channel