Costs to consumers and SMEs of a loss of access to in-person cash and banking services: Narrative report [pdf] Costs to consumers and SMEs of a loss of access to in-person cash and banking services: Technical report [pdf]

In the context of a consultation (CP23/29) on proposed new rules to ensure that UK consumers and small business entities (SMEs) continue to have access to cash (please see EventID 24271 for detailed information on the consultation), the Financial Conduct Authority (FCA) has released an accompanying research report and related technical report dealing with the assessment of the „costs“ for firms and consumers, if they lose access to „in-person cash and banking services at the location they usually use them“. The report was commissioned by the FCA and drawn up by London Economics, an economic consultancy firm, in an effort to assess these impacts and quantify associated costs.
Specifically, the narrative report describes the findings from a corresponding survey that was conducted by London Economics to evaluate these costs. According to these findings, the costs of losing access are manifold and include – among others – travel costs, bank switching costs, costs associated with the familiarization with a new bank’s products and services, and many others (please see the table on page 47). Travel costs thereby appeared to be highest among all costs assessed by the survey.
What the consultancy firm also found was that access to cash and related services is valued quite high by those who use it. In fact, most respondents noted that they would be willing to pay more for their banking services, if they could preserve local access to such. For regular banking services, a retail customer would be willing to pay up £18.10 annually (SMEs £247.34) to retain the service.
Further findings of the survey include:
– Rural consumers face higher travel-related costs (around 40% on average) when losing access to cash withdrawal at their usual locations.
– Larger SMEs make more frequent use of cash services, with surveyed small and mid-sized businesses depositing cash over 30 times per year on average, while sole traders and microbusinesses deposit cash less than 20 times per year on average.
– Consumers and SMEs would not significantly reduce their frequency of cash service usage even if access is lost at their usual locations, indicating the essential nature of these services and the necessity of continued use despite inconvenience.
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The technical report contains the survey that was used by London Economics to derive the data.