The indispensable role of cash in our society 

In an era increasingly trending towards digitisation, the use of cash can seem somewhat antiquated.

However, as the CEO of a customer-owned and regionally-based bank, I firmly believe that cash remains a cornerstone of our financial ecosystem, indispensable in times of crisis, vital for local economies, and a lynchpin in the community banking experience. Here’s why. 

Circulation as High as Ever 

It’s true that the use of cash for day-to-day payments has declined over many years, with consumers increasingly preferring to make their payments electronically. In fact, the Reserve Bank’s Consumer Payments Survey (CPS) showed that total retail payments made in cash fell from 69 per cent in 2007 to 27 per cent in 2019, and to 13 percent in 2022. 

Consumers are certainly changing the way they transact — trending towards greater efficiency and convenience than ever before. However, the amount of cash in circulation in Australia is actually rising. It’s just not being used for payments. 

The RBA has noted in recent months that there has been an upward tick in the number of high denomination banknotes on issue ($50 and $100 banknotes), with a particularly large spike during the pandemic. Usually reflecting an increased desire in the community to safeguard oneself in times of crisis — while cash might not be king, it certainly still has its place on the podium. 

A Beacon in Times of Disaster 

During the devastating floods of 2022 in Lismore, where digital systems faltered, cash was the lifeline that kept commerce alive. In these moments, cash emerges not just as a currency, but as a beacon of hope and resilience; a way to maintain normalcy in times of crisis and upheaval, and plays a role that we cannot afford to overlook. 

We’ve even seen local cafés, who do a roaring trade on the weekends, have to shut up shop for the day due to a power outage because no one is carrying cash. In many ways, the notion of a cashless society loses its sheen when confronted with the harsh reality of disasters, be they natural or technological. 

Making the Local Economy Go ‘Round 

Moving beyond an urban-centric view of the ‘cash v cashless’ debate, we find that the demand for cash thrives in regional areas. In these communities, cash is not a relic of the past but a present-day necessity. 

From local produce markets to on-farm sales, cash transactions are not just preferred by many local retailers but often the only option. And many regional communities also rely heavily on trade and exchange marketplaces like Facebook or the Trading Post, where paying with cash on purchase is a key way to reduce scams and fraudulent activity. Policies and banking practices must be inclusive, catering to the needs of all Australians, not just those in metropolitan hubs. 

The essence of community banking, and even more so customer-owned banking, lies in its personal touch, and cash transactions are a significant part of this experience. For many, visiting their local 

branch and interacting with familiar faces is a key point of connection and community. This connection, often facilitated by cash transactions, forms the bedrock of trust between a bank and its community — a timely reminder that banking is not just about money; it’s about people, relationships, and community, or at least it should be. 

Unfortunately, however, over the last 12 months, there has been a 10 percent reduction in the number of bank branches available in Australia. Across the last six years, it’s a 37 percent decline. And much of that has occurred because the number of transactions being done in branches, many of which used to be cash, are declining. 

It’s simply no longer viable for many financial institutions to continue to keep all of their branches open and there’s a similar trend, in fact, a stronger trend with ATMs. 

In 2023, there was a reduction of about 11.2 percent in the number of ATMs across the country, and over the last six years there’s been nearly a 59 percent reduction. While this largely comes back to declining uses of cash, prompted in part by measures to prevent the spread of COVID-19, less accessibility adds up to a very real reality that we are going to leave people behind. 

The Digital Revolution Leaves People Behind 

While the digital revolution in banking is undeniable and beneficial in many ways, it cannot and should not fully replace the role of cash. 

Not everyone has access to a secure and reliable internet connection, a smartphone, or even power to charge their devices. Many older people feel alienated and unskilled in the use of technologies. Many people with disabilities do not have control over their electronic accounts. And young people, particularly in the areas where our branches are, often want to learn the value of a dollar, or how to budget with cash first to avoid going into debt, which is all too easy to do electronically. 

Inclusion and Consumer Choice 

It is my belief that cash remains a crucial part of our society, serving as a reliable fallback in times of disaster, supporting the vibrancy of regional economies, and maintaining the inclusivity of community banking. This is also the view shared by the Australian Government, who earlier this year, released ‘A Strategic Plan for Australia’s Payments System’, indicating that they have no intention to create a cashless society. 

While the Government’s vision is for a modern, world-class and efficient payments system that is safe, trusted and accessible — nowhere does it say that we should be doing this without cash. Cheques, yes. But not cash. 

In many ways, this debate all comes down to consumer choice. As Australian banks, it is our duty to service our customers as best we can, and so we’ve got to be able to provide the choice for people to select how they want to interact and manage their money, within reason. 

In a world rapidly embracing digital solutions, let’s not forget the value of cash – a symbol of resilience, inclusivity, and community.

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