The complete dematerialisation of paper, cash and branches has not happened the way many in the industry thought it would, writes Chris Skinner.

There is a perennial debate about the future of finance, with three key areas that come to mind: paperless, cashless and branchless.


Going paperless has been discussed since the first day I saw a computer, but this wholesale move has yet to happen. We may have less paper, but we are not paperless. A great example of why this is the case can be seen with ebooks. Most probably assume that by now ebooks must outsell hardback and paperback books by a long stretch. Wrong. In fact, ebook sales are declining.

Something that is just ‘of the moment’, such as a news report, an article, a column, an opinion piece, a short diatribe and so on, can easily be read online. But a book, an encyclopaedia, a reference document with beautiful pictures or a document that needs to be kept forever, those will never go completely virtual.

This is similar to how I behave, I guess. I never print anything unless I am forced to – important documents and application forms – or because I want to, such as an article of length or a great story. As such, paper is never disappearing. It’s here to stay. Are you reading this online or in The Banker magazine?


Cash is dirty and carries germs. Nine out of 10 banknotes have traces of drugs, faeces or some killer bacteria. There are concerns that it can contribute to the spread of Covid-19. The World Health Organisation is urging people to use contactless payments when possible during the pandemic. We hate cash. So, it’s going to disappear, right?

According to Accenture, cash usage in Europe will fall by an average of 30% this year. Visa predicts that this reflects a long-term behavioural shift. Contactless payments are predicted to take an extra 10% to 20% of transactions at stores and ATMs as the result of the pandemic, and start-up companies who focus on epayments have seen transactions jump by nearly a third in recent months.

The logical conclusion is that times could not be better for online and mobile payments and, therefore, cash is on its way out. However, my own survey of key fintech influencers finds few who agree.

April may have seen a 60% fall in the number of withdrawals from UK cash machines, but the interviewees do not believe this will be a long-term behavioural change. They all see cash still being used in most nations to different extents for the foreseeable future, but with declining importance as mobile and digital payment adoption accelerates.

Just as moving to a paperless world is unrealistic, and instead we will just see less paper, the same is true of cash. We will see less cash, just not cashless. Reason? It’s the only form of instant payment that is trusted and anonymous. And because governments will be forced to legislate to keep it. After all, some governments tried to ban the use of cheques, but trade bodies often retaliate by pointing out that this will exclude the poor, old and vulnerable people. Not everything can be digital.


Many have also predicted the demise of the branch. They argue that the pandemic will decimate branch numbers because no one wants to stand in a queue to deposit or withdraw cash. Therefore, the branch is a waste of space.

I agree with all of the above. The branch was designed for a paper distribution model: cash, cheques, invoices, remittance notes, letters of credit, bills of lading and ledger books. The branch was all about the paper recording of transactions and confirmations. What a waste of space.

Today, banks are closing branches but say they need to keep some open because customers need access to human services for face-to-face advice about money. Wrong again. Mortgages, loans, foreign exchange and more can all be done online. We don’t need advice for those activities. However, what we do need is trust, which is what the bank is really there for.

Years ago, one banker said to me – as he worked to create a digital bank with branches – that the branches exist as a marketing investment. Where the bank has branches, they have two-and-a-half times the volume of assets than where they don’t. To put it another way, it has two-and-a-half times more trust where there is physical access.

With money, trust is key. I want somewhere to go where they can show me the money. As a result, a future with fewer branches is very likely, but a branchless future is not.

Less paper, less cash and fewer branches, but not paperless, cashless and branchless. That’s the answer, everyone. But what was the question?

Chris Skinner is an independent financial commentator and chairman of the London-based Financial Services Club.


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