Financial Inclusion and Access to Cash

In February's issue of Cash & Payment news we included three articles that look at financial inclusion and access to cash, a short summary of some recent research on attitudes to cash in the UK, a report of a webinar on financial inclusion in the UK and a separate European wide webinar looking at access to cash.

Financial inclusion and access to cash are separate topics but can be deeply interlinked, so we have chosen to run all three this month. We start though with a comment on the deep challenge of financial inclusion.

The deep challenge of financial inclusion

In countries where less cash is already underway, there is an underlying assumption that it is only a matter of time before cash will reach a tipping point that makes digital payments a requirement. The unstated assumption is that cash will end, and that digital is the future. There is an urgency, therefore, to make digital payments work.

While we can probably reduce the proportion of the population who are dependent on cash significantly from where we are today, the reality is that we will always have a large number of people who can’t ‘do’ digital. The question is how will society organise payments for them?

The discussions and work reported in this edition are valuable and should help achieve a reduction in cash dependent people, yet it risks leaving out that large number – but small percentage – who form a rump group of people for whom digital is a problem. What is the plan for this group?

The barriers to paying electronically person-to-person or remotely are well known: 

  • A lack of connectivity

  • The requirement for a smartphone

  • The need to have a stable and sufficient income to use a bank account regularly 

  • The intellectual capacity to cope with digital technology and money in an ethereal electronic form.

Research, therefore, needs to understand the extent to which these problems can be solved, how that translates into more digital payment users and what the plan is for those left behind.

The first and second of these barriers will fade away over time as investment in infrastructure rolls on and smart devices become ‘bread and butter’ items in the same way as a TV is.

The third barrier, to quote the bible, is that ‘the poor will always be with us’. But we have the example of Africa where M-Pesa type solutions are working well, slowly edging out cash. One problem with that is that such solutions don’t appear to be of interest in advanced economies.

The last barrier is, perhaps, the big one. Take as an example the elderly within this segment. While ones very elderly parent may have a banking app on their electronic device, it is likely to leave them bemused, if not terrified. Add in the real risk of sending money to the wrong people and/or in the wrong quantities. It is a bold assumption to think that today’s tech savvy generations, when old themselves, will be more likely to master new and ever evolving technology. The same applies to all the people in this segment. For this segment, we can’t assume education or technology will get us there.

Making the transition to a digital world is a long-term problem which will apply to all services offered digitally. This, of course, offers those responsible for payment with a wider community who care and who might work with it to think about this reality.

The difference is, though, that because the future of cash challenge involves money, it can’t be waved away with a comment that ‘somebody will help them’ or ‘technology will solve it’ or ‘they’ll catch up’. We must not be blind to that unbending reality and challenge that it brings.