Competition, innovation and customer choice essential to safeguard access to cash for UK’s vulnerable communities, according to OneBanks
- Shared banking innovator makes submission to HM Treasury’s Access to Cash consultation
- Government needs to support innovation to deliver for vulnerable communities
- Over half of SMEs still deposit cash over the counter in branches
The Government must support competition, innovation and customer choice, if it is going to safeguard access to cash for vulnerable communities, shared banking innovator OneBanks has told the HM Treasury’s Access to Cash consultation.
In the OneBanks’s submission, Duncan Cockburn, founder and CEO, has said that the Government must support innovation outside the existing LINK cash machine network “to create an efficient and sustainable network that can enable the recycling of cash and reduce operating costs.”
In its submission, OneBanks has drawn upon what it has learned from its shared banking kiosk pilots in Scotland to show it is not only vulnerable retail customers who need access to cash, but also SMEs. A research study, commissioned by OneBanks, into the behaviour and attitudes of UK SMEs that accept cash payments, showed that over half (57%) deposit cash in branch over the counter, two-fifths (39%) in branch via a self-service machine and a quarter (24%) at a Post Office.
OneBanks argues that free access to cash is important for financial inclusion and it is vital that the UK maintains a free access to cash network. However, to achieve that effectively, requires incentivising financial providers to invest in improving Britain’s outdated and underinvested cash infrastructure rather than simply freezing the status quo. The current set-up has missed opportunities to incorporate innovative technologies that would allow functionality such as full recycling of cash in ATMs - which would reduce both the environmental footprint and the cost of operation of ATMs - the ability to make cash deposits, the ability to use coins as well as notes, execute basic transactions such as bill and utility payments as well as paying for online goods and services with cash. All of which would make ATMs more attractive, and encourage greater use and improve the viability of the network.
OneBanks is seeking to create a nationwide network of fully staffed shared branches that could play a key role in preserving access to cash and other everyday banking services in underserved communities, alongside such enhanced ATM technology. It is vital therefore that the Government ensures that competition and choice are “hard-wired” into the proposed Access to Cash legislation, in order to encourage the development of alternative providers, and avoid simply reinforcing an existing market framework that has presided over decades of underinvestment and defeatist attitudes.
As OneBanks says in the submission: “This legislation and regulation is designed to ensure financial inclusion for all parts of society, including the most vulnerable, for as long as people continue to rely on cash, objectives shared by OneBanks and which we seek to address as part of our mission. It is the view of OneBanks that this can only be achieved in a cost-effective, sustainable and consumer focused manner if innovation is allowed to flourish and new organisations are able to be part of the cash infrastructure. “
“In order to achieve this, legislation to protect access to cash should have a bias in favour of new competition and innovation. For example, legislation should place an obligation on banks, when closing a branch or ATM, to look to a new alternative to ensure their customers continue to have access to cash and day-to-day banking services.
“If the government is serious about innovation then it must provide the necessary framework for it to flourish.”
Duncan Cockburn, founder and CEO of OneBanks added: “Cash is still relied upon by many vulnerable sections of the community, and not just the elderly. These also include those on low incomes who often rely on cash to budget. The growth of digitalisation, while bringing many advantages, also risks further marginalising those sections of the population who lack the confidence to manage their finances online, or do not have access to a smartphone or reliable broadband. We believe strongly that the legislation and regulation should be framed in a manner that does more than simply freeze the existing cash infrastructure footprint. Where alternative provision by relevant firms is required, there should be strong government and regulatory support for innovation and competition from new providers as this will result in an improvement in both the extent of coverage and the quality of provision.”
Read the OneBanks response here.View Response