Bank branches turn away customers depositing cash

For centuries customers have used bank branches to withdraw and deposit cash, but this everyday activity could soon be a thing of the past.

Banks across Britain have slowly started to launch a strange new type of branch – one that does not accept cash at all.

It would have been unthinkable in 1650, when a cloth merchant called Thomas Smith opened the first provincial bank branch in his native Nottingham. Yet there are now at least three banks in the UK where the Queen’s (or soon the King’s) face is nowhere to be seen.

Barclays – which operates two of the branches in King’s Cross and Hanover Square, both in London – said they are designed for customer meetings with bank staff, while Santander said its cashless branch in Leeds is primarily a co-working hub.

Both banks pointed out that the branches are within easy reach of others which do facilitate cash deposits, and Barclays said it has no current plans to expand them elsewhere.

But for Ron Delnevo, of the Payment Choice Alliance, this is a sign of things to come.

“It is absolutely the direction of travel,” he said. “What is the point of a bank branch that doesn’t handle cash?”

He pointed out that while the number of cashless branches is currently small, more and more branches now accept deposits via machines, rather than allowing customers to interact with members of staff.

British banks can state they are simply following what their rivals abroad have done. Those looking to deposit their krona in Sweden will now find that hundreds of the country's bank branches are cashless, while Irish bank AIB last year announced plans to ditch cash at 70 of its 170 locations – eventually backtracking following "customer unease".

For many, paying with notes and coins has become a forgotten habit – leaving us at a loss when we need a pound for the trolley at the supermarket or the locker at the gym.

As many as 23 million people in the UK used cash only once or not at all in 2021, according to the banking trade body UK Finance, an increase of 10 million in just one year.

Cash has gone from accounting for more than 17 billion payments – 45pc of the total number of transactions in 2015 – to just six billion in 2021.

The number of bank branches has fallen by 5,000, a reduction of more than a third since 2012. According to the Government, nearly 5pc of the population now live further than two miles from a bank.

In a bid to avert this slump, the Government launched the Access to Cash review in 2018, which led to the launch of Cash Access UK – a body tasked with introducing new initiatives to protect the use of notes and coins.

Cat Farrow, its chief operating officer, said: “Cash and face-to-face banking services are vital for many people and businesses across the UK. More people are choosing to shop online and bank digitally, which inevitably means fewer customers are visiting bank branches. However, it’s essential that we continue to support people who rely on cash.”

One such new initiative is shared banking hubs, where high street banks share one building, which were established in Rochford in Essex and Cambuslang in Scotland.

Customers of any bank can visit the hubs to deposit or withdraw cash, while the area’s most popular banking brands will send representatives to provide other services on one day each week.

Now, whenever a bank decides to close a branch an assessment is carried out by Link, which operates the cash network, to decide whether the area requires additional cash services.

This could include a shared bank hub, and there are now four in operation, with more in the pipeline.

However, critics highlighted issues with the way that the scheme works. Mr Delnevo pointed out that action can only be taken when the last bank branch in an area closes, which still results in the loss of a bank.

A source in the banking industry also said some communities, like Knaresborough in Yorkshire, have been waiting for more than a year for a shared banking hub.

The source said the way the system is structured is “problematic”, as notification is only sent when a branch closure is announced. The earlier Cash Access UK is able to become involved, the easier it would be to provide a replacement.

Mr Delnevo also criticised the fact that it has been left up to the industry to lead the charge: “It’s like giving the poacher not just the gun but the atomic bomb.”

The Payment Choice Alliance is calling for a Payment Choice Act which would appoint a body like the Bank of England or the Financial Conduct Authority, the City watchdog, to be responsible for guaranteeing the future of the cash network in a more specific way than current legislation.

The FCA already has an “expectation” that it is notified when banks intend to close branches, while the cash access legislation currently going through parliament allows for traders to offer cashback without a purchase and also guarantees “reasonable access” to deposit or withdrawal services.

A spokesman for UK Finance said that it estimates that 1.1 million people mainly use cash for their day-to-day shopping.

She added: “However, the overall number of cash payments decreased in 2021 and we expect cash usage to continue to fall, with cash forecast to account for only 6pc of all payments made in the UK by 2031.

“The banking and finance industry is committed to preserving access to cash for those who need it, including through banking hubs, free cash machines, enhanced Post Office services and cashback without purchase.”