The Central Bank has raised concerns with the Government that three-quarters of Ireland’s ATM network will no longer be under the control of retail banks by the end of the year.
The issue of the ATM network and the closure of bricks and mortar bank branches has been a political hot potato for the Government due to concerns around how older and more vulnerable cohorts of society might cope with such changes.
The regulator has outlined concerns on the matter in a submission to the Department of Finance’s Retail Banking Review public consultation.
It said retail banks are selling their off-site ATMs to “independent ATM deployers” which, it noted, are “unregulated”. Just 25 per cent of Ireland’s ATM network will be owned by retail banks by the end of the year compared to 100 per cent in 2015, it said.
In-branch services are also reducing, it said, with the number of bank branches countrywide set to reduce by 32 per cent compared to 2019.
“The trend towards the withdrawal of cash and other in-branch services is being driven by commercial decision making,” it said. “We expect banks to ensure that the impact of their decisions are considered carefully and with a consumer-focused approach. The impact for all consumers, including those who are vulnerable, must be assessed by banks, to ensure changes to branches and in-branch services are undertaken in an orderly manner. We expect that vulnerable customers will be provided with the necessary assistance to ensure that they can retain full access to basic banking services.”
The Central Bank said there has been a “significant shift” by retail banks towards the outsourcing of cash-based services, such as withdrawal and lodgment services.
It acknowledged that the use of cash is “declining” with the proliferation of card-based transactions, electronic funds transfers and digital-based transactions.
“This trend is set to continue, with new forms of blockchain-enabled payment mechanisms expected to emerge as well as other forms of instant payments,” it said. “Central bank digital currencies will also likely have a transformative effect in this area.”
The regulator said these issues are “impacting consumer services”, as well as “raising broad social policy considerations across availability and access to, and acceptance of, cash”.
Demand for cash
Cash use has been declining in Ireland in recent years, in particular during the pandemic. Central Bank statistics indicate that Irish ATM withdrawals were €13 billion in 2021, compared to €19.7 billion in 2019, a decline of 34 per cent.
The value of such withdrawals is now at about two-thirds of pre-pandemic levels, albeit they remain relatively stable at €1 billion per month.
The Central Bank said that while cash may recover as a form of payment, it is “likely that it will not return to pre-pandemic levels”.
“Nevertheless, cash remains an important means and choice of payment for consumers across the euro area including in Ireland,” it said. “We believe that it is important that it remains as a central part of the payments system. From a financial inclusion perspective, cash plays a vital role in ensuring the financial services needs of some consumers are served, particularly those without access to a bank account, those digitally marginalised and those who are vulnerable. It also represents a critical contingency in the event of electronic payment system failures.”
The Central Bank said it had engaged with international peers that have experienced similar trends and that “other countries have made legislative changes and implemented other interventions to ensure ongoing access to cash and in-branch services”.
In response to queries, the Department of Finance said the Central Bank’s submission is being considered by the review team and that the draft report will be presented to the Minister for Finance in November.
