Digital outage exposes weaknesses of the cashless society

Last Friday, a global cyber outage led to an unprecedented increase in cash withdrawals in the UK, with £6 million being withdrawn from ATMs. This disruption in digital payments highlighted the vulnerability of the transition to a cashless society. For many adults in the UK, dealing with cash on a daily basis is a familiar necessity. Last year, the number of people who primarily use cash for daily expenses unexpectedly rose by 66 percent – the first time in four years. The banking association UK Finance released these figures in the same week that the Financial Conduct Authority (FCA) outlined how access to cash will be secured in the future. This could be a relief for the poorest and oldest consumers, who are most dependent on cash. However, their lack of access to online banking and other digital services is a much larger issue. Adrian Roberts, Deputy CEO of Link, the operator of the UK's ATM network, emphasized: "The main message is that we are not ready to become a cashless society until digital payments are completely robust, reliable, and accessible to everyone." With the disappearance of traditional bank branches – 6,000 have closed in the last nine years – the regulator is relying on shared banking hubs, 100 of which are to be opened by the end of the year; a further 250 are planned. These hubs enable access to cash withdrawals and deposits, but there are no legal provisions for other banking services, increasing digital exclusion. UK Finance reports that 60 percent of all adults used mobile banking in 2023. This also means that 40 percent did not. While banking hubs offer direct contact with various bank branches, the limited services frustrate customers. Security concerns with IT connections mean that some community bankers cannot access customer data on their laptops, and customers have to bring their own devices. Managing finances online, however, comes with costs. One needs a smartphone or tablet that supports the bank's app. "Data poverty" is another issue; only 5 percent of those eligible use social tariffs – cheaper mobile and broadband packages for benefit recipients. For the 13 million Britons with very low digital competence, half of whom are over 70 years old, it becomes clear why the poorest in society often remain dependent on cash – it is not necessarily a conscious choice. Natalie Ceeney, Chair of Cash Access UK, believes that banks voluntarily work together to overcome IT issues and offer unified hub services. Digital exclusion, however, impairs the ability to manage finances and life overall. This includes missing out on online offers and innovative payment methods. Last year, one in seven Britons used "Buy now, pay later" to split a large payment into several interest-free monthly installments – a lifeline for those on a tight budget. Similarly, digital exclusion affects access to public services. State benefits like Universal Credit are "digital by default," which partly explains the estimated £7.5 billion unclaimed annually. Telephone hotlines are often chronically understaffed. HM Revenue & Customs aims to digitize taxes, but in the 2022-23 tax years, taxpayers spent the equivalent of 800 years on hold. The cyber outage last week also caused chaos in the UK health system. Most GP practices prioritize digital appointment bookings and offer convenient methods for retrieving test results and repeat prescriptions. Nevertheless, those digitally excluded rely on a poorer system. The recent loss of my smartphone made me realize how much digital connectivity is taken for granted. I couldn't order a taxi, check emails on the go, or find out if the Central Line was running. This might seem trivial, but the profound impact on my ability to manage my daily life was an eye-opening experience. The educational and economic disadvantages for those who do not have sufficient digital skills or means are far more serious. Following the CrowdStrike debacle, the situation may return to normal, but for millions of adults in the UK, the digital outage persists.