Could 'cash depots' be the answer for bank-less communities?

Tuesday, 7 May 2024

The Reserve Bank is pitching a range of possible solutions to keep the cash flowing in rural areas.

As branch closures make popping into the bank more difficult, the Reserve Bank (RBNZ) is pitching possible solutions to keep the cash flowing.

The central bank is planning to trial several ways for people and businesses to withdraw and deposit cash in bank-less communities next year.

Here’s what “banking” might look like in the future.

Hang on, isn’t the Reserve Bank looking into setting up a digital currency? Why worry about physical cash if we’re all moving our money around in the ether?

Digital cash is on the agenda, yes. But the plan for that ‒ if it comes to fruition ‒ is for it to circulate alongside cash, not replace it.

RBNZ director of money and cash, Ian Woolford, said New Zealanders still value the option of using cash, and some are frustrated by difficulties banking it.

Seriously? Who even uses cash these days?

Probably more people than you think. While the numbers are definitely trending down (an RBNZ survey, 57.2% of New Zealanders used cash for everyday purposes in 2023, down from 95.8% in 2019), 6% of people still make more than seven cash transactions every week.

Those people tend to be among more vulnerable groups, including the young, elderly and disabled, and were also more likely to live rurally.

So if you want to use cash, go to the bank.

Easier said than done these days, my friend.

A KPMG report released in 2022 found there were 144 fewer retail bank branches in New Zealand in 2021 compared to 2020, with 84 branches closing between 2019 and 2020.

Bank closures so far this year include four ASB branches in Auckland and one in Wellington. Residents of the Far North town of Mangōnui, about 45 minutes east of Kaitāia, also lost access to banking facilities with the closure of the Kiwibank counter at their local Four Square in March.

Hmmm, those are pretty stark stats. What are the current options if your community has no bank?

Apart from a potentially lengthy road-trip to the nearest branch or ATM? Pretty limited.

The New Zealand Banking Association is running a banking “hubs” pilot, in seven regional communities. The hubs house six of the biggest banks and offer features including Smart ATMs, private meeting rooms and representatives for the individual banks.

Outside of those areas, if you want to withdraw cash, you might be able to sweet-talk a retailer into letting you get cash out. They’re most likely to oblige if you’re making a purchase and how much they’re willing to hand over will be limited.

If your town doesn’t have a bank branch or ATM, the options for getting cash are limited. (File photo)

If you want to deposit cash, you’re out of luck.

It sounds like hubs could be a good solution. Is the Reserve Bank looking at more of the same?

No, the trials are separate and different. Options the RBNZ is keen to try include retailers being paid to offer fee-free cash-outs to customers, cash depots with automated banking facilities (deposits, withdrawals and change) compatible with all banks, and security van services.

“We want to see if better local cash infrastructure, and supporting retailers to readily offer cash-outs will help keep the option available,” Woolford said.

My town has no bank. Can we get in on this?

That depends. The RBNZ is looking to run its trial in rural communities with a population between 1000 and 10,000 and which have lost most or all cash banking services.

If your community fits the bill, don’t dilly-dally because they’ve already had plenty of nibbles ‒ nearly 80 expressions of interest at last count.

Applications are open from May 6 to June 7, with the trials expected to start between September and February.