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Forget cashless and branchless, it’ll never happen

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There are regular discussions at the Financial Services Club, conferences and meetings about the cashless, branchless future.

Visa and MasterCard are huge advocates of a war on cash, as are the mobile wallet providers.

Brett King and the Bank 2.0 crowd talk lots about a branchless world of banking and how branches are all irrelevant to future bank operations.

Let’s be clear, it won't happen.

There is no such thing as a branchless world, and a cashless future will not happen in my lifetime.

Much as I would love to see this future of a branchless, cashless future – don’t get me wrong, I’m a huge advocate of getting rid of bricks, mortar and paper – the reason it will never happen is that these forms of commerce and finance are important.

Branches are required for advice, sales and service but, more importantly, trust.

Regardless of how irrelevant branches may be in terms of distribution, any bank that wants to get new account openings has to have a branch.

That’s why:

  • Santander purchased Abbey, Bradford & Bingley and Alliance & Leicester’s branches to become one of Britain’s largest branch-based bank networks behind Lloyds and Royal Bank of Scotland (NatWest);
  • Virgin purchased Northern Rock’s branches to get some form of physical footprint in the UK;
  • The Co-operative Bank is buying the 632 branches Lloyds has been forced to sell due to the European Commission’s verdict on UK bank competition after the HBOS merger; and
  • Metro Bank is opening their tenth UK branch in High Wycombe, with a plan to achieve 24 branches by the end of this year, and then organically grow to over 200 branches by the end of the decade.

Some people argue that branches are irrelevant but, if they were, why are all of these new and expanding banks opening or acquiring branches?

Because they create trust and because it is regularly shown that anyone, including and especially young folks, want a branch locally if they open an account.

Even HSBC’s branchless bank, First Direct, has the backing of HSBC and its ATM network to rely upon if things go wrong; as do Cahoot! (Santander) and Smile (Co-operative), our internet-only banks.

Branches are a core part of community and relating to people with a human touch.

This is why branches will always exist.

So we talk about a branchless future, but should be talking about a less branch future.

The same with cash.

We will never be cashless, just less cash.

This has been shown in many economies, specifically in Iceland, Sweden and other economies.

They get to certain level of cashlessness and then the cashless process ends.

This is because there is no substitute for cash today: cash is anonymous, immediately recognising a value exchange, fuels the shadow economy and is totally trusted.

No other form of currency exchange has the same capabilities.

Not yet anyway.

We can talk about a branchless, cashless future, but it’s a dream and will not be reality for years to come.

So I’d rather talk about a less branch, less cash future, and see what that means.

How far can we push the less branch, less cash world?

What is the minimum number of branches to be effective (in the UK, they say about 250).

What is the minimum level of cash that can be in play to run an economy effectively (in Sweden, they say about 3.5% of the value of GDP, which would equate to about a fifth of the volume of transactions).

Can we push this any further?

If so, by when and how?

Something that will be debated for years to come, I’m sure.


Chris Skinner Author Avatar

Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog,, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...

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