A few years ago, a San Francisco start-up caused a media frenzy when they launched a tech-enabled, self-service snacks and sundries machine for weary urban professionals looking for fabric softener and Snickers bars on a 24/7 basis. The firm made international headlines, initially for its tone-deaf name, Bodega*. In US cities, bodegas are usually independent corner shops, often run by immigrant families. Putting mom-and-pop stores out of business and then rubbing their noses in it is not a good look for a new company.
However, outside of what was called “the worst start-up name of the year” by many in the tech press, what I found perplexing about Bodega was that in the guise of announcing a new buzzy, innovative consumer product, this group of entrepreneurs essentially produced a vending machine.
I thought back to that new-fangled vending machine for the 21st century last week when I spotted a news item about HSBC installing a “cash pod” in a rural area in the UK that recently lost its last physical bank branch. The bank reportedly plans to install 10 more of these “pods” throughout the UK. This is after it closed 114 branches in 2023.
So here is where I go looking for “the news”. In an effort to support rural areas, which have become banking deserts (and to quell bad press), HSBC have unveiled… the ATM. Is that right?
When Barclays installed the first “cash point” in the world at a branch in Enfield, England 57 years ago, it was innovative. Does a “cash pod” in 2024 — which I assume does have better technology than its 1967 grandfather — really represent progress?
When analysing the emergence of new technology that has a profound impact on people’s everyday lives (like the ATM has for almost 60 years), so many in this industry focus solely on the progress and fail to pay attention to the opposite and equal reaction. A move to digital and mobile applications means a decrease in physical cash and in-person interactions. For those not ready, not experienced, not supported in these moves — that empty space once populated by human bank tellers and envelopes of cash isn’t replaced by a digital utopia, it just remains empty.
Tomorrow, the UK’s Financial Conduct Authority consultation to protect access to cash closes. The FCA is proposing a new regulatory regime, which would require banks and building societies designated by the UK government to assess and fill gaps, or potential gaps, in cash access provision that significantly impact consumers and businesses.
The aim is to “ensure reasonable provision” of cash deposit and withdrawal services for personal and business current accounts across the UK, according to the FCA. This includes access to both notes and coins, and access that is free of charge for consumers with personal current accounts.
The FCA expects to finalise these rules in the third quarter of 2024.
Not everyone is happy with the FCA consultation terms. Mark Aldred, retail banking expert at banking software provider, Auriga, says: “The proposed regulation to control when and how bank branches and ATMs are shuttered is too weak and does little to protect against the loss of both access to cash and financial services in our communities.”
The loss of a person-to-person banking channel is happening too fast with too little care and consideration, adds Aldred. “Can we please make it clear that the closure of a branch should never happen until an alternative is operational rather than just being on the drawing board. Should we not also expect to have more choice than to trust Post Office Limited with a local monopoly?”
(Our next Functional Banking Magic podcast focusing on this issue, entitled Post Office Blues, will be broadcast on February 13.)
Meanwhile, amid all this government consultation, industry comments and concerns, HSBC is working to comply with incoming FCA rules by rolling out more ATMs — I mean “cash pods”. Progress indeed.
*Interestingly, the team behind Bodega took the criticism of their company name onboard, rebranded with the name Stockwell, and raised $45mn in VC money by 2019.
Liz is deputy editor of The Banker. You can connect with Liz on LinkedIn, or follow her on Bluesky.
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