A Cashless Society
Considering the rate at which technology is progressing, it is clear we are living in the golden age of technology. Financial technology, or fintech, especially has had a profound impact on the way we navigate through our day-to-day lives. The days of cheques, paper statements, and bills sent by post are soon to be over. For many, they already are. Britons are increasingly using services and products provided by fintech companies to manage their finances. In fact, digital finance is becoming such an integral part of the global financial infrastructure that we are heading towards a cashless society more quickly than ever before. According to The Guardian, note and coin payments dropped by 35% in 2020.
Who is Vulnerable in a Cashless Society?
The pandemic has caused many to switch to cashless payments because businesses have been promoting contactless and mobile as the preferred methods of payment. This was largely because these methods were believed to have been safer, as it was thought to decrease the risk of virus transmission. However, many companies have kept their cashless policies intact even as the world returns to some semblance of normalcy. 10 years ago, half of all transactions were made using cash. Today, cash is used for only one in six payments. Evidently, cash use has decreased dramatically in just a short amount of time, and the pandemic greatly accelerated this decline.
It is no surprise that the younger generations are largely embracing this tech transformation. With smart devices at their fingertips from such a young age, it is inevitable for the youth to be digitally literate. Understanding how to navigate a digital program is practically second nature to them. In many instances, these technological shifts have made our everyday processes easier and far more efficient. This is true not just for young people, but also for the average person. However, if we continue to move away from cash and move towards more fintech solutions, we must also consider the older generations.
According to Age UK, a registered charity aimed at helping older people, around 2.4 million people over the age of 65 relied on cash daily in 2020. Having effective and readily available banking services is essential for managing one’s finances, which in turn makes it an essential aspect of life. Therefore, because the elderly population still relies so heavily on cash and physical bank branches, they are at risk of financial exclusion. This would only work to further increase the divide between them and the rest of the society that is growing more digitally literate by the minute.
In order to avoid this, promoting financial inclusion is essential. This means ensuring that useful financial services and products are accessible to all individuals. To be in control of one’s finances promotes autonomy. This allows the individual to feel a sense of safety and empowerment, making the ageing process that much easier. Therefore, access to these resources is a necessity.
The Decline of Bank Branches
Unfortunately, physical bank branches are at risk of becoming obsolete as technology improves and advances. Some of these brick-and-mortar institutions are already closing all around the UK. Since 2015, 4,299 bank branches have either been closed or scheduled to close. There are communities that this has happened in where one bank branch was removed, and this resulted in the high street being without a bank. Some new emerging banks don’t have any physical branches at all. Companies like Monzo and N26 offer banking services that are entirely online. This causes great problems for those that do not use digital banking. For this demographic, it is necessary to have a network of branches in order to effectively manage their finances.
This is largely the reason for why ministers announced in the 2020 budget that they would implement policies that protect access to cash. Nevertheless, the country’s cash system is still in peril because the income of cash-sorting centres and ATMs is declining. It is no longer a matter of waiting for cash-users to switch to digital banking. This may never happen, and many businesses have already transitioned into being completely cashless. And unfortunately, physical banks cannot single-handedly solve this issue. With the rate of closures, it is becoming more difficult for people to rely entirely on in-person banking for their financial needs.
Fraud and Scams
Additionally, if a person has less access to digital resources, this opens opportunities for fraud and scams. Official crime figures showed that a person aged 65 or older becomes a fraud victim every 40 seconds in England and Wales. Scammers are savvy. They typically target those who live alone, are likely home in the daytime, have savings or valuables, and are more willing to speak with them. Recently, multiple Lancashire residents have fallen victim to scams. In just two weeks, seven cases of courier fraud were reported. In addition to this, a sum of £23,500 was stolen from three elderly residents through telephone scams. This is precisely why digital literacy is imperative as cash is phased out.
Digital Finance: Where to Start
For those that are apprehensive about digital banking, the best place to start is on a desktop computer rather than an app on a smart phone. This will be a bit easier to navigate. You can always download the apps to your mobile once you feel more confident. Additionally, many banks offer a live online chat option. Some even allow you to book appointments for video calls.
At PCC, we understand how digitalisation risks leaving people behind. That is why we are committed to a user-friendly approach that helps our clients understand how they can effectively manage their finances. Our advisers are always here to answer your questions about lost pensions, retirement planning, investments, and more. Contact us today.