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Access to cash during Covid-19: identifying and managing temporary gaps in provision

A summary of joint work between the PSR and FCA

Throughout the Coronavirus (COVID-19) crisis, the PSR and the FCA have collaborated with other regulators and the industry to collate a single database of cash access points in the UK1. This has enabled us to monitor the emergence of access to cash ‘cold spots’ and coordinate the industry response to ensure that vulnerable and self-isolating groups can continue to access cash2.  

  • The PSR and FCA collected information on c.19,000 bank/building society and post office branches and c.60,000 ATMs
  • The analysis showed that, over the COVID-19 period of April – June 2020, 99% of population maintained their pre-COVID-19 access to cash within a 3-mile and 5-mile radius
     

Despite the decline in cash use in recent years, it remains an essential payment mechanism for many. During the crisis and lockdown, some consumers, such as those who are vulnerable or self-isolating, continue to rely on cash to pay friends or family members to buy groceries on their behalf. Some of these consumers will continue to have a need to use cash as we move out of the Coronavirus crisis.

Using data provided by industry, the PSR and the FCA have created a dataset of cash access points across the UK, including ATMs, bank branches, and post offices. By reviewing the data, we have been able to quickly monitor temporary closures to identify access to cash ‘cold spots’ during the crisis.

This information was used to support coordinated action through FCA-led meetings with senior stakeholders from across the industry, including banks, building societies, the Post Office and LINK, as well as the members of the Joint Authorities Cash Strategy (JACS) Group3.  

Collecting a comprehensive dataset of access to cash points in the UK

From the outset of COVID-19, it was clear that access to cash would be impacted. Due to the unprecedented nature of the crisis, the extent of the impact on consumers requiring cash was uncertain.

We collected information on the locations and temporary closures of cash access points from the major banks, building societies and the Post Office on their bricks and mortar and mobile branches, and from LINK and the larger ATM deployers on the ATM locations.  

The combined dataset had information on approximately 19,000 branches of banks, building societies, and post offices (99% of UK branch coverage), as well as around 60,000 ATMs, which accounts for most of the estate. This is the most comprehensive dataset of cash access points to date. We have recently published a map of cash access based on this dataset.

During the period April – June 2020, fewer than 12% of all UK branch locations close and fewer than 12% of ATM sites closed.

Mapping ‘cold spots’ for access to cash

Our mapping work looked at where people live across each region in the UK and compared it with where ATMs, bank branches and Post Offices are located and had closed due to government restrictions for COVID-19. This allowed us to build a detailed picture, highlighting the impact of those closures on consumers. 

We built a model to calculate the distances from the centre of census output areas (OAs) to the locations of all cash access points within a 3-mile, 5-mile and 10-mile radius4.  We then identified ‘cold spots’ areas, where the population had access to at least one cash point (be that a bank or post office branch or an ATM) within a 3-mile radius but where this was subsequently lost following the closures5

This analysis showed that over 99% of the population had maintained its pre-COVID-19 access to cash (free or charging) within a 5-mile radius – with less than 10,000 people across the UK losing access in this radius. Fewer than 0.1% of the UK population has lost access to cash within a 3-mile radius. This figure has been relatively low and stable over the entire COVID-19 period. However, despite good overall coverage, we are also very aware that the characteristics of some consumers may mean that access is still restricted even where coverage is good within a certain radius, for example if they are vulnerable, or because of restrictions on public transport. 

While some of these restrictions will ease as we move out of the crisis and allow some consumers better access to cash, for other consumers issues such as transport and mobility may continue to be a barrier to access. Understanding these needs, characteristics and barriers better is a key part of our ongoing work on access to cash so we can help maintain it for those who need it in the longer term.

The map below shows the extent and location of access to cash ‘cold spots’ due to COVID-19 closures across UK local authorities. The analysis shows that, in most of local authorities, between 0 and 1% of population lost access to cash due to COVID-19 closures near their homes6. As the analysis calculates loss of access to cash in relation to where people live, access may have been available near where people wanted to use the cash. The analysis of additional ONS information showed that the majority of ‘cold spots’ were in rural areas.

For one local authority in the Outer Hebrides (Na h-Eileanan Siar), the impact may have been more significant; up to 12% of the local population may have lost access near their homes.  In these scenarios, we engaged firms to understand the alternative measures that were put in place to mitigate the impact on customers.

Loss of access to cash within 3-mile radius as compared to pre-COVID-19 situation, as at 1 June 2020

Supporting an industry response

The information on the extent to which consumers were affected by loss of access to cash has allowed the industry to coordinate several initiatives to support access to cash for affected consumers. 

These include ensuring that, where branches and ATMs are closed, consumers are signposted to the nearest available cash and banking services; opening call centres for consumer queries and proactively contacting vulnerable customers; developing alternative solutions such as courier deliveries of cash, Post Office cheque-cashing services; and pre-paid and debit cards that allow trusted third parties to make payments on people’s behalf.

We are seeing the re-opening of branches and ATMs which should lead to a gradual improvement in access to cash for many consumers as lockdown restrictions ease. We will continue to monitor the situation to ensure a smooth transition out of the lockdown, and we’re working with industry to prioritise re-opening of branches and ATMs in areas which most urgently need cash access. 

To continue to build our understanding of different cash needs across the population during this time, we have also engaged regularly with consumer organisations to gain insights during the crisis and to understand the impact on specific groups, such as the vulnerable or elderly.

Next steps 

Supporting cash access that meets people’s needs continues to be a priority for the PSR and FCA. On 16 June, we published a joint statement setting out our approach on access to cash issues. 

As members of the JACS Group, the FCA and PSR will support the Government in its development of legislation as announced in the Budget 2020. 

We remain committed to helping consumers and businesses access and deposit cash. Ahead of legislation being introduced, we will work with industry to explore how it can provide a sustainable and appropriate solution to meeting the needs of consumers and businesses who want to withdraw and deposit cash. It is key to understanding the access to cash landscape, that access is not viewed solely through the lens of the number of ATMs and bank branches, but instead considers how other solutions may also be an effective way of meeting consumers’ needs.

As consumer demand evolves and innovation develops we will work with industry to address issues where the cash access infrastructure may lead to oversupply in less cash dependent areas, while other cash dependent areas in society could become undersupplied. 

We are also working on a collaborative project with researchers from the University of Bristol to build on the COVID-19 mapping work. The project will look to develop a comprehensive set of socio-economic factors and consumer characteristics that are relevant to understanding the consumer cash needs and the availability of access to cash at a national and local level. This will help inform our work with the industry to explore how it can develop a sustainable way of providing access to cash in the longer term for those that need it. We intend to publish a final report from the project later this year.

 

1 Cash access point refers to ATMs (both free-to-use and pay-to-use), bank, building society and Post Office branches.

2 Cold spots’ are population areas (defined as census output areas) which had cash access point(s) within 3, 5 or 10-mile radius prior to covid-19; but lost it (them) due to covid-19 closures.

3 JACS Group members are HM Treasury, FCA, PSR and Bank of England.

4 Census output areas (OAs) is the most granular census data available, averaging around 300 people per OA. We focused on the 3-mile radius for this analysis as the priority for coordinating action with industry to address issues with lost access during the height of the crisis period. We have since advanced our analysis and can now map when looking at access to cash at 1 mile radius, such as in the maps we’ve published on access to cash coverage more generally.

5 We estimated how many people were affected by loss of access by using the UK 2011 Census population estimates for each Output Area. We then aggregated the results up to postcode level, LSOA and local authority level using the ONS Postcode Database as at February 2020 to map output areas to report the results at a more meaningful level. 

6 Up to 12% of population may have lost access to cash near where they live in Na h-Eileanan Siar area of Scotland. Some remote communities such as the Outer Hebrides have been particularly impacted by branch closures, due to the inability for mobile branches to operate safely given social distancing, and the fact that the frequency of transport links such as ferries were temporarily reduced. In these scenarios, we engaged firms to understand the alternative measures that were put in place to mitigate the impact on customers. For instance, several firms offered to courier cash to customers who are shielding at home, and similarly, many firms proactively contacted their customers to explain what alternative options there may be in the event that local branches were closed.