The decline of cash

The decline of cash

Cash use has been in significant decline in the UK over the past decade, and today fewer than 1 in every 5 payments are made in cash. Nonetheless, cash remains an important payments medium for many, in particular for vulnerable and low-income households. The UK Government and the banking industry are therefore committed to preserving access to cash even if the proportion of the population using it continues to decrease.

In light of this,  Frontier was approached by a client who was looking to better understand the possible scenarios for the future of ATM services in the UK. Given that there are costs associated with running each cash machine in the country, one interesting question to answer is what a hypothetical “optimal” cash point network would look like for the UK. We modelled how the number of free-to-use ATMs could be reduced while ensuring that customers retain an appropriate level of access to these services.

Our results showed that it is theoretically possible for 95% of the GB population to have access to a cash point within a 15 min walk with just over 16,000 outlets.[1]

Optimising the cash point network

In the language of computational geometry, optimising the cash network required solving a facility location problem. The problem typically arises in emergency services or manufacturing plant location. In its simplest form, the problem considers how to place a single facility to minimise the sum of distances to all customers, but it can be extended to include different constraints.

In our optimisation, we combined a dataset on street network and typical walking times with granular population data to first understand how many of the existing free-to-use ATMs could be phased out without a reduction in access. We then considered how that network could be augmented with new theoretical points (such as retail stores that offer withdrawal services or new ATMs) to ensure that the remaining population is serviced.

Our analysis showed that the number of free-to-use ATMs in GB could be reduced four times to 10,000 while maintaining access to an ATM within a 15 minute walking distance to the same proportion of the population as today. With additional 6,000 free cash points, 95% of the population could be serviced within a 15 min walk.

Protecting cash access

Our estimate of 16,000 cash points only provides a minimum bound for the number of free-to-use ATMs needed in the country. More ATMs would be needed to service a greater proportion of the population within a 15 minute walk and to provide appropriate coverage in locations with high demand. It is also important to consider the proximity of alternative cash access services to serve customers when an ATM is down and access to “assisted cash” services (such as bank branches) for those customers that need additional support with their everyday banking needs.

Our analysis contributed to a better understanding for our client of how to provide access to cash. Our client later participated in a landmark agreement, with other UK banks, committing to protect cash access through an initiative that will ensure an appropriate provision of free-to-use ATMs and shared services such as bank branches.


[1] We only considered ATMs in Great Britain due to data limitations for Northern Ireland.