Nearly a third of over-65s in Britain are “uncomfortable” using online banking, leaving them at risk of financial exclusion as banks continue to close high street branches, according to a campaign group for older people.
The findings by charity Age UK, published on Wednesday, reflect the reliance on physical cash by a key demographic of more than 11mn people, close to a fifth of the population.
Cash remains the second most common payment method after debit cards but the coronavirus pandemic has accelerated the move to an increasing use of cashless payment methods.
At the same time, banks continue to cut back their expensive high street branch networks. There are fewer than 6,000 branches across the UK, less than half the number two decades ago, with 662 branches closing last year. So far this year another 238 are set to shut, according to data from ATM operator LINK.
“The ability to manage your own financial affairs is something that many older people understandably hold dear,” said Caroline Abrahams, charity director at Age UK. “It is extremely upsetting if you find your capacity to do this is being removed because your local bank branch is shutting down and you can’t easily get to another one.”
The research, based on a survey of 1,147 UK respondents, found that the older people were the less likely they were to be comfortable with banking online, but close to a quarter of the youngest age group (65 to 69-year-olds) had reservations.
Ministers have promised to protect cash access through the financial services and markets bill that is going through parliament by giving the Financial Conduct Authority greater powers.
But the new legislation fails to detail how the regulator might act. The government has only set out its expectations that people should travel no more than a “reasonable distance” to withdraw or deposit cash. Instead, the FCA is expected to undertake a review on geographic targets at a later date before advising the government on the next steps.
“Our financial services bill will give regulators the power to set standards that guarantee people will have reasonable access to their hard-earned cash,” the government said.
One industry-backed initiative is making slow progress. It has pledged to develop a network of 52 so-called “bank hubs”, run in collaboration with the Post Office, to target communities that have lost their last high street branch. The rollout was agreed in late 2021 but so far only four hubs are operational, including two that were used in the pilot.
“Delivery to date has been slow and with the banks continuing to announce closures this will leave more communities to become banking deserts,” Age UK warned in its report.
Gareth Oakley, chief executive of Cash Access UK, which is overseeing the bank hubs programme, promised the rollout would speed up. “It does take time to set up a new shared hub in a community, but as we move forward it’s unlikely that there will be a gap between a branch closing and a banking hub opening.”
Derek French, a former bank executive who headed a campaign to promote community banking services, said he was disappointed that the new legislation had failed to make it a requirement to ensure people had access to in-person banking, allowing banks to instead provide more limited automated cash services.
“Legislators are playing into the hands of the offending banks who will lose what momentum they have given, reluctantly, to establishing full banking hubs in favour of a cheaper ‘solution’ — for them — and a much less effective one for their customers,” he said.
