Is free cash access in freefall?

LINK, the UK’s main cash machine network, has announced funding will be made available to protect free access to cash. Is this too late to save free cash access for consumers? Patrick Brusnahan writes

LINK claimed that if a high street could lose an ATM or Post Office, it will step in to ensure that an ATM is made available. Furthermore, it will be paid for with funding from all of the UK’s main banks and building societies.

In addition, LINK announced that, for the first time, it will directly commission free-to-use ATMs in communities with poor access to cash.

Over the coming months, and with the support of local MPs and councils, ATMs will be installed in Battle, East Sussex, Bungay, Suffolk, Hill Top in Nuneaton, Tywyn in Wales, and Durness in Scotland. The locations will form a restricted trial that will run through 2020.

LINK CEO John Howells says: “LINK is determined to defend free access to cash across the UK in the face of very rapidly declining cash use. Today’s action will protect consumers whilst much needed industry reforms to move to a more sustainable utility infrastructure take place.”

As more and more business is done online, the usage of local branches has been in decline for some time, and this decline is predicted to continue.”

Ian Bradbury, CTO for Financial Services, Fujitsu UK, adds: “The move for more free ATMs highlights the important role cash still plays in the financial life of Brits across the country. Although we are moving towards a cashless society, it shouldn’t be at the expense of the 2.2 million people in the UK who are still reliant on cash. Reduced access can have unpredictable consequences for consumers as well as a number of industries; particularly in hospitality and retail, in which cash is still heavily used.

“Maintaining an ATM estate can be challenging as cash replenishment and machine maintenance involves high recurring costs but we must prioritise consumers’ needs by ensuring access to cash is free and easy. By investing in technology, we can help lower the costs of running ATMs by saving power and energy, and streamlining various processes. For example, by using emerging technologies and advanced computing techniques banks can optimise cash management and distribution, which could significantly reduce the cost of cash handling and create a more efficient ATM network.

“As more and more business is done online, the usage of local branches has been in decline for some time, and this decline is predicted to continue. This has made it uneconomic for banks and building societies to maintain a physical presence with branches in many more rural locations. It is therefore good to see that these organisations are jointly funding the placement of these free-to-use ATMs to continue to give support to local communities, recognising a commitment to a broader social purpose and ongoing community support.”

Cash withdrawals going down?

In the first four months of 2019, there was a decline in LINK cash withdrawals of 8.7% in London. This was followed by the South East (7.9%) and South West (7.7%). The smallest declines were in the North East (3.7%), Northern Ireland (4.6%), and Yorkshire (4.9%). Scotland saw a decrease of 5.4% and Wales saw a drop of 5% in usage.

In addition, LINK saw a decline in balance enquiries. More customers chose to use online and mobile banking as balance enquiries dropped 18% between 2016 and 2019.

There has been a steady decline in usage of LINK services. LINK volumes peaked in 2016 and in value in 2017.

Furthermore, in the first six months of 2019, LINK transactions were 8% lower than in the same period in 2018. The total value of cash withdrawn also dropped, but less so.

Furthermore, the reduction in LINK transactions is expected to be between 9% and 10% for 2019 compared to 2018.