Original text here from Patrice Bernard (LinkedIn)
While there has long been a downward trend, it seems that even when setting aside the specific effects of the health crisis, the use of cash, as measured by Nationwide through withdrawals at its ATMs, is starting to rise again. This appears to be correlated with increasing pressure on purchasing power.
This phenomenon is occurring for the second consecutive year (again, excluding the 'anomalous' circumstances of 2020 and 2021). According to the establishment, it is partly explained by their commitment to maintain their presence in localities abandoned by major British banks. Additionally, it is also attributed to a defensive behavior in difficult times: for many, using physical money continues to be seen as the best way to manage their budget.
There's nothing like withdrawing allocated funds for different expenses as soon as income is received, to ensure not spending more than planned. This involves having no possibility of exceeding the available balance and paying for all purchases in cash, leaving the debit card (with its overdraft risks) or credit card (with its hidden commitments) at home. An additional benefit is that the physicality of coins and notes allows for an instinctive monitoring of remaining funds.
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What this consumer behavior observed by Nationwide reflects is the ongoing complexity for them to manage their personal finances in a 'digitalized' world. Despite the tools available, a significant portion of the population struggles to manage bank accounts that become completely abstract when represented solely by numbers on a screen. The increasing stress towards the end of the month only exacerbates the situation.
So, how to respond... if we consider that cash is a less ideal, obsolete solution to a deep-seated problem? There probably isn't a magic solution, unfortunately. Clearly, the priority should be to work on basic financial education for those affected, enhancing their ability to manage their daily budget, with proactive local support to facilitate their transition from a 'tactile' approach to a digital logic.
