The Economic Impact of Maintaining Cash Networks in Rural Areas

Why Cash Matters in Rural Communities

Changes in cash usage caused by digitalisation and an increased move towards online banking have led to a decline in access to cash across the UK, yet cash is still used daily by over 11 million people.
Around 80% of the UK’s land mass is officially classified as rural, and about 20% of the UK’s population lives in rural areas – that’s over 12 million people. Over the past few years, the rural high street has changed dramatically, with reductions or total closures of many retail shops and bank branches. The impact of bank closures are felt hardest in rural areas and coastal communities, where the closure is often the last branch in their community. In rural areas, according to a report by the Financial Conduct Authority (FCA), 45% of residents have a bank branch within 5km of their home.

In addition, with rural areas having a higher proportion of older adults (aged 50 plus) compared with the England average, there are particular vulnerabilities when access to banking services relies upon the availability of digital knowledge and skills. Findings from the Financial Lives 2020 Survey found that around 2.4 million people aged 65 and over in the UK relied on cash to a great extent in their day-to-day life, representing 21% of all older people.

The Unique Challenges of Rural Economies

Rural economies face several unique challenges that distinguish them from their urban counterparts. Research by Access To Cash, published in March 2019, claimed that cash use has halved over the past decade, and said people in rural communities, as well as the elderly and vulnerable, would be among the hardest hit if cash and coins were withdrawn altogether. The review identified risks to the viability of rural communities, including the loss of personal independence and increased risks of financial abuse and debt. They expressed concerns that vulnerable people would be more likely to get scammed or defrauded in a cashless society; families on low incomes might struggle to balance household budgets; while some people may struggle to manage their money.

Infrastructure is a significant barrier to economic activity, with those living in remote or rural areas finding digital access difficult through a lack of broadband or reliable mobile data coverage. Of the 5.3 million adults who never use the internet, 3.7 million live in rural areas.

Almost 50% of the UK’s bank branches have closed since 2015, making cash and associated services less accessible than ever before. The effects of branch and ATM closures can be particularly severe in rural communities, where residents often have to travel for miles to reach their nearest alternative source of cash and where digital infrastructure can be poor, making it harder to embrace online banking and payments. According to a 2022 Which? report, on average, rural constituencies have just 0.1 bank branches per 10sq km and 1.1 ATMs, compared with 2.6 branches per 10sq km in urban areas and 31.3 ATMs.

The Role of Cash in Rural Transactions and the Threat of Bank Branch Closures

For many people in rural communities, a physical branch is still an important part of their banking experience. Bank closures risk preventing many customers who favour the traditional way of banking from accessing cash and face-to-face banking services. In such cases, cash becomes essential for day-to-day transactions, as people rely on physical currency to buy goods and services.

In a 2022 survey by the Association of Convenience Stores, rural residents were asked what service types they felt were most wanted locally: both a bank/cash machine and a post office were considered one of the most wanted, where they did not currently exist.

The sheer distances, time and money involved in accessing branch-based banking services in rural areas can be prohibitive. What would formerly have been simple, local transactions, could now become long and expensive trips to the nearest bank branch, which might be several miles away.

How NoteMachine Ensures Reliable, Face-to-Face Banking Services

NoteMachine has long championed the importance of maintaining face-to-face banking services within our financial landscape. NoteMachine is the second largest provider of ATMs in the UK, operating 9,500 machines on a free or pay-to-use basis. Around 27 million people use at least one of NoteMachine’s ATMs every month and they supply £21 billion in cash each year. With a comprehensive suite of financial services, NoteMachine draws on over 40 years’ experience in the financial sector to deliver turnkey banking solutions.

Financial institutions face the challenge of how they can remain present for customers and still facilitate cash withdrawals and deposits, with the disappearance of ‘bricks and mortar’ high street banks. In response to the ongoing closure of traditional banks, NoteMachine has developed AXIS by NoteMachine, an alternative banking solution ideal for use in under-served areas.

AXIS Hubs can Boost Local Economies

AXIS hubs offer vital face-to-face banking services, enabling locations that close a branch to still maintain a presence in the community, as well as offering the all-important cash withdrawal and deposit facilities. They are particularly valuable for communities that have lost most, or all, of their high street bank branches, or where a higher proportion of the population is digitally excluded.

AXIS hubs by NoteMachine are modern, sustainable and quick to install, and can be customised to any bank’s specific requirements. It means that banking customers benefit from the same user experience as a high street bank, without the bank taking on unsustainable overheads.

The modular banking hubs can be easily adapted to the needs of an area, either as a single branch hub or a shared banking facility housing several banks. By offering multi-deposit points in more rural areas and cold spots, they can be used by as many as 10 banks in locations such as supermarkets, car parks and petrol stations.

What AXIS by NoteMachine delivers at a singular bank level is the ability to gain reach for existing customers and potential future customers, allowing banks to cost effectively market their brand and their services, whilst being located in areas with maximum footfall. AXIS hubs can ultimately help futureproof the relationship between banks and their customers, while remaining an efficient and cost-effective solution for financial institutions.

Joining Hands for a More Financially Inclusive Future

Maintaining access to cash in rural communities will promote inclusive economic development. Many rural areas rely heavily on local businesses and small enterprises, so banks need to make a commitment to maintaining access to cash by ensuring the availability of ATMs, maintaining a sufficient cash supply, managing operational reliability and providing convenient access points for consumers and businesses to withdraw and deposit cash.

Access to cash is about consumer choice and the demand for banking hubs like AXIS will only increase as more bank branches close. It is possible for banks to rationalise their property portfolio and successfully adapt, without damaging customer relationships.

NoteMachine is still actively campaigning to keep the access to cash issue at the forefront of parliamentary priorities. It’s critical that the access to cash debate keeps up momentum to enable financial inclusion for everyone, especially in rural communities.

If you’d like to find out more about NoteMachine or AXIS hubs, please enquire at [email protected].

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