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August 22, 2018

Cash is critical

RBS Chief Executive, Ross McEwan was being interviewed recently on the radio, setting out the case for bank closures. Apparently, it’s because most of the country now does most of its banking online. And on that basis, he feels entirely justified in implementing his plan. But it turns out we all have very different banking needs for all sorts of different reasons depending on where we live. Some intriguing research just out from HIE with a number of important finds – not least the fact that that old-fashioned commodity – cash – continues to play a critical role in the life of rural communities.


Indigo House Group

To read the full Executive Summary click here

Cash is critical to the day-to-day functioning of the local economies and the communities across the Highlands and Islands. The most striking conclusion from this research is the persistence of the need for cash, amongst individuals, businesses and community groups. The survey evidence revealed some reduction in the use of cash, and a much larger decline in the use of cheques. There is a corresponding

increase in the use of debit and credit cards, as well as electronic payments, whether online or by card, but cash is still critical. Current patterns of usage and the rate of change suggests the move to different payment channels will be relatively slow in the Highlands and Islands.

There is still a need for cash, particularly within the more rural and remote communities. Cash is particularly crucial to the functioning of small retail shops and businesses, prominent in rural areas, and access to facilities to process both cash and cheques is thus fundamental to their day-to-day functioning and long-term viability. Cash was also found to be core to the functioning of tourism, agricultural and fishing businesses, partly because of their seasonal demand for labour. These businesses need access to cash beyond that which is available at ATMs

Having banking facilities and the ability to deposit and access cash also underpins the day-to-day functioning of many community organisations. There are 1,196 social enterprises currently operating in the Highlands and Islands, with 85% of these led by, and accountable to, people in a particular

community. In remote and rural areas, these groups are often providing key services not otherwise available. Banking facilities also need to be understood as being a core to the functioning of local community infrastructure. It is clear that community organisations’ banking methods are more traditional, and while much could be done to encourage channel shift for these businesses, that change will take time. In the meantime, bank branch closures could negatively impact on the operations of these organisations, the life blood of many communities.

Residents, tourists and many businesses in the Highlands and Islands need ATMs to be present and reliable. The findings show that while ATMs may be present, they are not always available 24 hours, and more critically are not reliable, especially those based within shops or other premises.

Taken together these findings show an apparent disconnect between banking closures and economic development initiatives driven by public sector agencies, especially in relation to tourism. Successes in growing tourism as a means to generate income within local and fragile communities could run the risk of being undermined by the loss of access to cash via local banks. This potential undermining of the local economy is not only in relation to the apparent lack of support for the cash economy, but also the apparent ‘running down’ of communities where banks as the linchpin of the local high street is lost, and with it there is a perceived impact on the economic wellbeing of places.