 Hey folks, welcome to the podcast. So we're doing a special series of podcasts which I'm recording over Google Hangouts. So we're doing audio and video because for some unknown reason people don't want to come see me face to face right now. But there's always opportunity and the cool thing is I'm able to now podcast with people from all over the world. So we're going to get an amazing eclectic mix of people from different industries, different perspectives to share their story and tell us you know their thoughts and feelings on what's going on right now and all of that cool stuff. Hope you enjoy it. Please subscribe in all the usual places and enjoy. So yeah we're in. So welcome to the podcast and it's really cool to be joined by Natalie Cini CBE who's the Chair of Access to Cash Review and Innovate Finance. Natalie how you doing? Good, great to be here thank you. Pleasure, pleasure. So we had a little chat or fair about the cashless society and the various cash trends that are going on right now and I haven't used cash since lockdown. I mean everyone's like you know asking me to tap and pay on my phone and what if like what are the trends and like what have you been seeing? Well the UK is quite far ahead internationally so if we go before lockdown we were we were already down to around a quarter of all transactions being cash down from it was actually two-thirds just a decade ago. So we've seen quite a rapid fall. Lockdown has certainly accelerated it so we saw I mean most cash in the UK is taken out of ATMs. We saw ATM volumes go down by about 65% during lockdown which just meant there was there was less cash being used unsurprisingly. You know people who would have done their shopping with cash were having to buy online or rely on carers and relatives. Now that's bounced back a bit as lockdown has eased but we're still running about 40% lower than this time last year so we've probably seen about five years of declining cash every five months. That felt standing but it's amazing I mean you know like you just couldn't go out and I mean with the virus and the government's telling you to stay at home so you know it's been great that you've been able to you know to buy these things online get delivery pay tap and pay on your phone I mean it's a it's a good thing right I mean well it's a good thing for those who can and it's not a great thing for those who can't and and I think there's a widespread perception that whether you use digital whether use cash is a matter of choice and for a lot of us it is. So when I did the access to cash review a year ago about half of us are pretty happy operating digitally we could cope with our cash of the remaining 50% it's it's roughly half who quite like having cash and prefer cash but could use digital and then we've got about 20% of the population who actually for a variety of reasons need cash and what we found during lockdown is those of us who had a choice went digital but the 20% who need cash actually really struggled. So Age UK said it was the biggest thing they were called about which did a survey in the middle of lockdown when only essential shops were open and found that about 10% of the people they surveyed had tried to buy essential goods and not been able to buy them and they were quite quite worrying stories actually of people in supermarkets who were spending the last of their pennies to get essential goods and couldn't buy because they couldn't pay. So I think that the challenge is how do we help those who want to move digital because for a lot of us there are big advantages but how do we also make sure that we don't leave 20% of the population behind? So why so this 20% then so are you saying just so that they're typically older not they don't use card or phone but what's the kind of scenario? Yeah it's not only older so it's heavily skewed towards lower income and more vulnerable so if you earn less than £10,000 a year you're 14 times more likely to be dependent on cash than if you earn over £30,000 a year and that's because actually cash is still the best way to budget you know if you've only got £50 last the week if you've got it in cash you can make sure you don't go overspent. Direct debits can come out when you're not expecting them it's very easy to go overspent as we all know when you tap a card. So cash is still a really important way for lots of people to budget there are lots of reasons why people don't use or can't use digital banking now some of it is people who are older but some of it's people with disabilities so I'm running a program with cash pilots at the moment and one of the the pilots we're looking at is a learning disability charity where they've got a lot of people who actually simply struggle to manage bank accounts but they can manage cash they can function in cash so there's a real worry actually for some people that they need cash to maintain independence but when we did our review we found a whole variety of reasons why people needed cash and some really really surprised me one for example domestic abuse charities told us that often an abusive partner will take control of someone's bank account and so squirreling away cash is a way the victim can maintain independence and we heard from mental health charities if you've got a long-term mental health disability you might be fine most of the time but when you're in the throes of say a manic episode or depression you can blow your savings and spend wildly and so a lot of people with long-term mental health conditions don't yet trust themselves to manage a digital entirely digitally and so cash is a safe way of making sure you don't overspend so there's a whole variety of reasons most of them with the fintech hat on we could design solutions for but those solutions either don't exist yet or there's certainly not sufficiently ubiquitous for everybody to use yeah interesting so you're right i mean so if i've got 10 pounds in my in my wallet and i'm like right i'm only spending 10 pounds today i'm only going to spend 10 pounds you know i god knows what i tap and pay all the time it's it's really interesting but at the moment though with the pandemic you know for those vulnerable people they've just i mean they've just not been able to to spend the money i mean a lot of shops just aren't taking cash right now a lot of shops aren't taking cash but actually they've still needed to spend the money so if you think of say somebody who is vulnerable and has been shielding and has relied on carers or volunteers to get their shopping one of the issues has been how do you pay the volunteers you know you don't want to hand over a contact list card for someone to go and potentially take all your savings with on a series of 45 pound lump cash is still quite a safe way of doing it and and if you think of somebody who again is perhaps frail or vulnerable giving to 20 pound notes and looking at the change you can instantly check whether someone's ripping you off whereas with a digital solution you might have a nice digital solution but you can't do it as quickly and by the time you've gone in and checked the person's probably gone so there are distinct advantages right now of cash over some digital solutions for some people yeah now it is solvable in the long term almost certainly yes okay but right now there are a lot of reasons why quite a lot of people in the UK still need cash in part or whole and a lot of the people I'm talking about have bank accounts but it but it's that particular use case that they need cash for so the inclusion the inclusion kind of issue right now is important right and so so do you think what can be done then I mean do you think shops right now should be taking cash to help these I'm like how are we going to get over the problem I guess now and then well there's two sides to this there's the acceptance issue which you partner with shops but there's also the access issue so let me sort of take them in term up to now the big debate has been about the access issue because the cash infrastructure in Britain was created for a high cash age at peak we had about 60,000 ATMs bank branches just about everywhere and they've all been steadily closing as cash is used less the economics simply don't work the problem of course is ATMs where 90% of cash is taken out in the UK close most quickly in the areas they use least which is rural areas which is where you've got a high proportion of people who need help city centres you can still get them because there's enough football so the access issue is a big one there are quite a few towns in Britain which step back five years had three bank branches a main post office and three ATMs none of the above so the access issue is a big one the answer to that is coming up I mean government committed in March in the budget to legislate to protect the cash infrastructure while people need it and the regulators are currently working with the banks to look at essentially a footprint design so you'd say for example within an area that has say five shops we'd expect there to be suitable cash access within wide distance so I mean okay that's great let's work in and train the acceptance issue which you raise is a really important one that's had less debate in the UK because to be honest till lockdown shops that didn't take cash were more likely to be London city centre restaurants and bars in trendy areas yeah cool coffee shops and stuff yeah all coffee shops and discretionary services what's happened in lockdown is they've become essential services I mean lots of local councils are going cashless lots of leisure centres are going cashless places where people don't have a choice you know that that is their local local service the debate in the UK is only just starting in this area some countries have taken quite a strong view so in the US four US states have now legislated to require all shops to take cash going through congress at the moment to look at making that federal legislation what why are they doing that exactly the same reasons worried about the vulnerability and of course in the US there's a higher percentage of people who are unbanked right in the UK we've got 1.3 million people unbanked but in the US as a percentage of population it's much higher so there's a lot of people in the UK who truly have no choice in the US that debate starting so my own view would be essential services really should take cash you don't have a choice whether to pay your council tax you don't have a choice whether to pay your tax bill local leisure centres there tends to only be one in an area those services really should give payment choice yeah and there are safe ways of taking cash even with covered a number of innovators are coming up with quite clever cash receipt solutions or you could pay in a cash machine and get a voucher that you take to the till this is not rocket science yes we shouldn't allow essential retailers to use this as an opportunity frankly for excluding the vulnerable I'm more relaxed on really discretionary services I mean if you if you run a coffee shop and you hardly have anyone who walks in or takes cash actually you you have a legal right to say this is how I operate in the way you price and the services you sell and I think in the way you take payment but shops should just retailers should all be aware that when they say we're cashless what they're really saying is the most vulnerable 20 the population aren't welcome here and retailers really should think about that before they make the choice yeah and also I mean let's be honest for retailers and for shops it's cheaper to take cash because it costs well some and some and I mean I said I have spoken to just about every retailer I've entered in the last two years to have this conversation and the honest answer is it kind of depends how you run the retail and depends how you count right so it does cost some money to take cash and bank cash the money it costs is your staff cashing up at night the staff taking the money to the bank which as bank branches are closed actually could be fair distance could be amount of amount of time and the bank charges your bank charges you which vary by retailer by bank digital you still pay but you pay differently you typically pay a percentage of every transaction which could be sort of two three or four percent of each transaction now if you are an independent retailer who's running your own business actually your time isn't a real cost to you it's a pain you don't pay yourself by the hour so actually for many independent retailers digital feels like it costs more because they don't count the value of their time so they'll do the cashing up in their own time they'll take the money to bank in their own time digital costs more for a Tesco or Sainsbury's who absolutely do the maths on the cost of digital versus the cost of cashing up and banking cash and who can negotiate very good digital deals I have no doubt whatsoever that digital is cheaper right okay and and and every shop will have a different view according to how you do the maths I mean London taxi drivers have universally said to me I might prefer cash because I pay four percent on everything I get get food card love can you give me so it really varies and as a result independent retailers make their own quite rational choice in different circumstances yeah it's also interesting as tax I don't know tax has gone digital now so if you're a business with HMRC you have to be you have to be digital there's a bunch of different systems so so if you're taking cash digitally it's it's much easier well again it kind of depends how you account yeah I mean if you did a run to the bank every day to pay your money in it's it's still in your bank account it's still digital that's true that's true so what we also need to everyone thinks shops when they have this debate actually there are a lot of trades people who earn less than the amount by which you have to pay income tax so think of someone who maybe cleans local windows a couple of days a week retired does a bit of gardening and and particularly in in for elderly communities that sort of support is is pretty important for independence that cash in hand economy is quite high and it's it's not primarily about tax avoidance it's about a quicker easy way of getting paid because you get money in and that's your money to live on and then you spend the money and you don't want to buy a machine you don't have to rely on tapping cards particularly in a rural area with no mobile signal or broadband and of course that's the other issue even if some people want to go digital we haven't yet got the mobile and broadband infrastructure in Britain to allow it to happen across the whole of the UK that's ridiculous I mean absolutely true absolutely true I mean we really need to get on to that the interesting thing I before lockdown is when I'm walking through the tube stations the the thing that struck me the last few months before lockdown was that buskers were taking cards you know because say a few people have spare change and I thought that was interesting absolutely well as part of the review I did last year we went to Sweden because they're not actually that many countries who have gone further down this road than we have in the UK I mean to give an example if we're about a quarter of all transactions are in cash before lockdown most of Europe's about 80 percent in cash yeah right whereas Sweden's before lockdown was down about 15 percent so we went to look at Sweden they've had exactly that issue so they've gone further down the route of cashlessness in the UK partly because they've got a very very good peer to peer to peer app called swish which is it's as easy for me to send you money as it is for me to text message you okay and so it's universally used included including by the old the vulnerable basically if you can text message you can send cash and all the banks work together so you only need someone's mobile phone number you don't need to know their bank details because they're together and that's taken them that that level further but even so there were people in Sweden who couldn't function and we met a homeless charity very similar to to the big issue in the UK and actually their stories are very interesting one because no one had spare change they were trying to sell their magazine but what the charity did is set up essentially a mirror a shadow bank account for their for their sellers so that the seller could use a QR code which we don't tend to use so much in the UK but you know they were giving their individual QR code that basically says if you swipe this with your mobile phone it gives me equivalent two euros um that was going straight in their shadow bank account of the charity so the seller didn't have to carry cash wasn't at risk of theft and actually for the first time some of them learned to budget because they could get their money at the end of the week rather at the end of the day they didn't think they had to spend it by the end of the day in case they got robbed overnight and it actually was a really interesting digital solution of how some of if you're thoughtful about solutions digital can actually be quite inclusive but you have to be very thoughtful about the solutions so have we have we just kind of stumbled to to cashlessness rather than any kind of real planning and forethought yeah in this country absolutely and to be honest that was the big lesson from sweden what they said is we have sleepwalked into this think before you you go as far as we have and what was interesting in sweden um was they were just going through the stages that they've now gone through of putting the brakes on so they had an all-party commission that said we've gone too fast too far we've left people behind they've now introduced legislation that require banks to put cash facilities in for for their population and and they didn't go as far as requiring shops to accept cash because they said look it's already gone too far but sweden have put the brakes on and yeah their big recommendation to us was don't sleepwalk into this um which is essentially what i concluded in my review a year ago and the good news is the government has now understood it the regulators have understood it the banks have understood it we've seen a halt in some of the actions that would have happened to take out the cash infrastructure there are now very active debates to try and maintain it yeah it's still hugely under threat and i don't think we can expect commercial companies to do things that are um for public good unless there's actually legislation to make them because that's not what their shareholders demand of them so we do need legislation but there is now quite a widespread awareness of the issue in the uk yeah what have you ever did you look much at kind of what's going on in china and africa because they've got what we chat which i think you can do everything on and they it's it's really interesting how payments are so different across the world and there's a lot we can learn so i mean china yeah if you go to china you will find some bits of china we chat pay and ali pay essentially a bit like swish in sweden you you pay for everything via your mobile phone and they've invested an awful lot into um ai as a way of payment as well there are there are restaurants equivalent to our kyc where all you need to do is smile at a screen as you walk in it identifies you and that's your payment amazing no actually if you think about it for for china which has a huge amount of illiterate people that she quite need you've suddenly increased you don't need to be literate to pay so there's some quite interesting ideas floating around and and you're right in some bits of africa where there were a large amount of population completely unbanked um you look at mobile phone payment solutions where people essentially transfer money on the payment on the mobile phone um as a way of not even needing a bank account so there are lots of models out there that we can learn from um and those examples are actually pretty inclusive in terms of what did you do but i think that the challenges um in the uk i don't believe all the the inclusive solutions will happen by default because you know on an 80-20 year old the banks pretty well serve their customers 80% of us are fine um and a lot of the segments i'm talking about are not particularly rich they're not particularly large and they're not early digital adopters so i think it's going to take a really joined up concerted effort to bring in the solutions that could help everybody i do think it's possible but it's not going to be quick um and it's not going to be easy what about the privacy issue because again a lot of more vulnerable people um you know i speak to my grandma's 98 and she loves a bit of cash um she uses her card too but you always hear it you know all you know it's not safe privacy is there is there still that that thought process around it not being i think it's growing actually so i think separate privacy and safety because i think people conflate them but but people have different concerns safety i mean the reality is all forms of payment have their their risks so you know if we walked around with 500 pounds in our pocket we're risk of being robbed and interesting everyone thinks the elderly love ATMs actually most the elderly hate ATMs for exactly that reason which is why they actually really like to bank branches they go in the bank yeah because standing on a high street with lots of money in your pocket scares most of us so the safety issue is there with cash but it's also there with digital and i mean we look at how how many scams have happened since lockdown and even pretty savvy people can get scammed if you really don't know what you're doing online you are more vulnerable so you can understand why people are worried about about safety on privacy i think the challenge is yet to come actually because i don't think most people in the uk realized just how much data is held on them um i mean if any i dread to think well if you are i looked at the data that's held by our bank on us you would be able to build a very very detailed picture of how we live how we work um who our friends are whether we're having affairs um etc etc i mean it's quite scary what you can know about someone um and i don't think most of public realized that um so i think at the moment when people have a choice privacy is taken aback burner and in fact i was quite surprised when i did my work a year ago i did quite an extensive survey we spoke to over 200 um organizations and we interviewed over 2000 people privacy didn't come up as a big issue really but then yeah but but look at the issues that um came up when we found that Facebook and Cambridge Analytical were sharing data and everyone went oh my god that's shocking actually any of us know much about digital services but of course well what else do you think they're doing and and i think this is yet to come as people start to feel they don't have a choice and ask more questions we'll have a couple of scandals and i think the privacy issue will come out and i mean if you turn just to a data debate most data data experts will tell you that privacy is the big debate of the next decade um who has control over your data um what you can harvest who can access it um what what people can do with it so i think that date that debate is still very very embryonic but will it will it play out in cash debate absolutely yes interesting well it's definitely played out in this track and trace app that the government have been trying to it just you know culturally in the UK you know unlikely to really take off it's interesting but culturally in Asia yeah you know they use they're used to it and it's interesting whether there's some kind of cultural differences that will mean how quickly this cashless trend accelerates or not definitely i mean a lot of a lot of currency is about trust so i mean the UK hasn't got a gold standard anymore actually what we're doing is we're trusting the Bank of England now in the UK we do in some economies look at look at Central America or or South America they don't you've got hyperinflation and and also use of cryptocurrencies because frankly people prefer to trust a third party they don't know than their own government um trust levels are very different in fact in sweden when i asked the question to government to regulators and the central bank why are you so far ahead on the cashless revolution they said well primarily because the public trust the banks and trust the government you've got and they said to me you've got to remember Natalie we haven't been invaded in 200 years trust how swedans run um and that level trust means people will use a tap and pay app run by their banks because they trust the banks in sweden everybody's tax returns are open the privacy concerns we have in UK aren't there and as a result people are quite happy to trust a digital currency or sorry digital payment and potentially a digital currency that the swedish bank are looking at operating because trust isn't a big issue in the UK i'd say we're medium you know we do we do trust the bank of England but we've got some concerns yeah go to South America and you'll find a completely different picture and and i agree asia is very trusting in some bits of asia because you have no choice i mean um the government actively use the payment data in china um on a whole range of of activities so your payment data will inform whether or not you get a passport yes and you're used to that that kind of scenario that that is the world you're operating yeah yeah interesting what what do you think just kind of before we wind up um digital currencies and you talked about it a little bit so you've obviously got bitcoin ethereum facebook have been trying to get something going um you mentioned the government in sweden is is that um a trend that you think's going to be like happen very soon or is this something that's kind of a longer term i think when we talk about digital currencies we conflate lots of different things so there's the currency itself whether it's you know and there's big differences there so are you talking about a currency that's anchored to a national fiat currency are you talking about a free floating currency are you talking about actually a fiat currency that just happens to be digital so there's there's lots of different forms of currency then there's the wallet so i mean when facebook announced libra yes it the two no if i take facebook's libra the idea that you or i could pay each other through facebook is an utter no brainer and the big debate is why on earth facebook didn't do it three or four years ago because it's ubiquitous in asia it's an utter no brainer you know if i'm having a conversation with you and i want to pay you why can't i transfer that via a message linked to a bank i can do it through my bank why can't i do it through facebook that's easy the secondary question though is what would i pay you in and yes would i want to pay you in a currency which i understand and i trust or a currency run by somebody who i don't quite know that could go up or down and i think there we have a different debate and one of the reasons why central banks are and sweden is leading the way but the uk is considering various options here too are considering a digital currency is actually if people are going digital will allow them to use a currency run digitally provided by the central bank because then you don't privatize your money supply yes and also right now it feels like a you know you mentioned k-maj analytical and there's various scandals going on with social media tech companies i think if you put i think it feels like you trust the the central bank more than a facebook right now um in the uk that's true um in the uk that's true yes you're right in south america so to your question of what we'll take off um i don't see widespread adoption of non-anchored non-fear currencies in the uk because actually our inflation is very stable our bank of england is largely trusted and we're quite conservative country there will always be a few people experiment but actually most purchasing of bitcoin or ethereum or or cryptocurrencies in uk is speculation not for currency purposes that's very different in countries where you really don't trust the central government and you've got rampa hyper rampant hyperinflation where actually taking your money out the country and putting it in something that at least might be vaguely more stable than what you've got and you can get it out and the bank and the government's not going to requisition it might feel a much better bet yeah um i certainly can see digital central bank currencies taken off as central banks say you know what let's let's keep let's let's keep that currency within the country um yeah and not have it privatized um but still very early days in the uk i don't think it's going to be the next the big debate of the next few years i think some of the big debates and payments for the next few years will be more around not just digital payments but automated payments so the internet of things when our fridge reorders our groceries because it notices we've run out of milk um when our i live in the country so i have oil rather than gas or electricity when your oil tank renews itself and notices it's run out and order some more etc i mean the internet of things and payments is going to be fascinating when we can walk past things and have personalized prices on our on our glasses that recognize us the customer i mean payments is very dynamic and very exciting yeah it's going to change dramatically over the next decade but we are going to have this challenge of how do we bring everyone with us so inclusion is the big thing i think inclusion is one of the key issues and payments in the next decade yeah watch is just kind of to the last point what would include what would it take to include everyone like if you were if you had to do like a few things right now to make sure that we were doing it in the right way the challenge is it's more than a few things so so maybe let me give you an analogy and it's not it's not a brilliant analogy um i mean 15 years ago we tried to introduce digital tv into the uk actually very successfully the difficulty with digital tv is we had to switch off analog because the signal could only have one so it's not a good analogy to cash in the sense that i don't think you'd want to just commit switching off cash but a group was set up called digital uk whose job was to make sure everybody in the uk could get digital tv and what they did is systematically analyze the needs and unsurprisingly it was a pretty wide range it was everything from are there enough masks in the right places to to people understand what it is to what's the standard for buying the tv's if you remember the big tick mark yeah to the education programs and ultimately to the poorest in society buying them tv's and it's quite good an analogy because if you look at payments and cash some of it is going to be about broadband and mobile infrastructure across britain which is probably the biggest single reason some of us can't can't use digital then they're going to be about developing the specific products and services to meet specific needs which i think are largely doable there's going to be education there's going to be support and for the poorest in society there's ultimately going to be buying people smartphones or getting them bank accounts yes and and i think that that model that was done for digital uk for tv is not a bad model to look at because it did it did make sure that everybody was included yeah it's certainly a model i think we could actively look at now for digital payments definitely awesome thank you so much for for joining me i really appreciate it such an interesting topic and i hope i hope we do it in the right way brilliant thanks lewis thank you so much see you