Why banks should maintain treasury services for customers

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Opinion: We’re much further from a cashless society than some might think

The recent announcement that AIB plans to withdraw cash services from another 70 branches across the country has drawn widespread condemnation from consumers, businesses, charities and public officials. The swift reversal of the decision shows that we are much further from a cashless society than some would like to think. Here’s why.

According Christine Lagarde, President of the European Central Bank (ECB), “banknotes are part of our economy, our identity and our culture”. However, many countries are seeing a drop in the use of cash, and not just since the Covid-19 outbreak led to a greater shift to contactless payments.

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AIB drops plans to go cashless at 70 branches after protests, say RTÉ News

In 2020, the Swedish Central Bank reported that less than 10% of Swedes used cash for payments, down from just 40% 10 years earlier. The Norwegian Central Bank reported that only 4% of payments were made in cash in the same year, probably the lowest rate in the world. Cash is often associated with money laundering and other crimes, such as theft, coercion and tax evasion. It also carries the risk of loss, is not suitable for large payments and can be expensive to manage.

The European Central Bank’s Treasury Strategy, also available on the Central Bank of Ireland’s Consumer Hub, clearly sets out eight functions and benefits of cash and commits to supporting and protecting access to treasury services for all . Almost all of the cash functions listed in the strategy relate in some way to supporting financial inclusion and consumer protection. It recognizes that cash is the only method of payment that does not involve third parties, guaranteeing the right of consumers to the protection of their privacy, data and identity in financial transactions.

According to RTÉ Radio 1’s The Business, is a cashless society in Ireland on the horizon?

Cash is described as fast and secure and can only be refused by prior agreement on the means of payment. The strategy places a strong emphasis on the inclusive nature of cash, especially for those who do not have or have limited access to digital payment systems. It specifically states that cash is “essential for the inclusion of socially vulnerable citizens, such as the elderly or low-income groups”. Cash is also recognized as important for supporting savings, making small gifts or payments on behalf of others, and contributing to children’s financial literacy.

Although the circulation of banknotes and coins in Ireland has declined and the use of non-cash payments increased by 52% in 2020, evidence is mounting that cash remains of significant importance to a lot. In the UK, a 2019 report claimed that 17% of the UK population would struggle to cope in a cashless society and would be “left behind”. Low income, rather than age, was found to be the strongest predictor of money addiction in this country.

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From RTÉ Radio 1’s Today with Claire Byrne, massive backlash against cashless BIA at 70 branches

A consumer banking study commissioned by the Department of Finance in 2022 shows that the main reason people visit a bank branch in Ireland is to deposit or withdraw money. Low-income people, people over the age of 65, and people in rural communities were generally more dependent on cash payments and less likely to use online banking. Additionally, Age Action Ireland reports that 65% of people over the age of 65 experience digital exclusion, which impacts their ability to access online or contactless financial services. For this cohort, cash transactions remain essential to everyday life.

This is also true for low-income people. In 2020, 30% of Irish welfare recipients were paid in cash. UCC research presents evidence that low-income cohorts often manage their finances – both spending and saving – using cash, because it helps them feel more in control or because that they have had negative experiences with direct debits and missed bank charges.

Money management advisers, such as the State Budgeting and Advice Service (MABS), will suggest that some consumers use cash to manage certain expenses, as it is more tangible, making it easier to followed. Social media influencers, such as Irish Budgeting Mammy, promote the use of “cash wraps” to budget expenses. This approach is not too different from the old Irish practice of “managing”, where a household would set aside money throughout the year for Christmas or other important family events, a strategy of financial resilience still common in many low-income households.

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From RTÉ Radio 1’s Today With Claire Byrne, a discussion on a cashless society with journalist Barry Lenihan, Sean Keyes of The Currency and consumer journalist Siobhan Maguire

There is a clear need to maintain cash and cash services to support the inclusion of diverse consumer needs. Even in Sweden and Norway, where there has been a cash surge, regulators have introduced measures to compel banks to ensure the availability of cash services, as rural dwellers and consumers more older people say they would struggle without cash.

The review of retail banking currently underway in Ireland recognizes that a completely cashless society is not an appropriate goal and recognizes that cash facilitates financial inclusion for all. Ireland’s Financial Inclusion Strategy, now 11 years old and not available online, focused on providing a standard bank account to tackle financial exclusion. This was superseded by the EU Payment Accounts Directive in 2016, making basic bank accounts available to everyone.

Given the pace and scale of change in the financial services landscape in Ireland, it is essential that a revised strategy emerges to protect and promote access to financial services. It should empower consumers by building financial capability and well-being for all. This must include access to cash and cash services.


The views expressed here are those of the author and do not represent or reflect the views of RTÉ


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