Banks are closing ATMs and branches in an attempt to ‘nudge’ users towards digital services – and it’s all for their own benefit
All over the western world banks are shutting down cash machinesand branches. They are trying to push you into using their digital payments and digital banking infrastructure. Just like Google wants everyone to access and navigate the broader internet via its privately controlled search portal, so financial institutions want everyone to access and navigate the broader economy through their systems.
Another aim is to cut costs in order to boost profits. Branches require staff. Replacing them with standardised self-service apps allows the senior managers of financial institutions to directly control and monitor interactions with customers.
Banks, of course, tell us a different story about why they do this. I recently got a letter from my bank telling me that they are shutting down local branches because “customers are turning to digital”, and they are thus “responding to changing customer preferences”. I am one of the customers they are referring to, but I never asked them to shut down the branches.
There is a feedback loop going on here. In closing down their branches, or withdrawing their cash machines, they make it harder for me to use those services. I am much more likely to “choose” a digital option if the banks deliberately make it harder for me to choose a non-digital option.
In behavioural economics this is referred to as “nudging”. If a powerful institution wants to make people choose a certain thing, the best strategy is to make it difficult to choose the alternative.
We can illustrate this with the example of self-checkout tills at supermarkets. The underlying agenda is to replace checkout staff with self-service machines to cut costs. But supermarkets have to convince their customers. They thus initially present self-checkout as a convenient alternative. When some people then use that alternative, the supermarket can cite that as evidence of a change in customer behaviour, which they then use to justify a reduction in checkout employees. This in turn makes it more inconvenient to use the checkout staff, which in turn makes customers more likely to use the machines. They slowly wean you off staff, and “nudge” you towards self-service.
Financial institutions, likewise, are trying to nudge us towards a cashless society and digital banking. The true motive is corporate profit. Payments companies such as Visa and Mastercard want to increase the volume of digital payments services they sell, while banks want to cut costs. The nudge requires two parts. First, they must increase the inconvenience of cash, ATMs and branches. Second, they must vigorously promote the alternative. They seek to make people “learn” that they want digital, and then “choose” it.
We can learn from the Marxist philosopher Antonio Gramsci in this regard. His concept of hegemony referred to the way in which powerful parties condition the cultural and economic environment in such a way that their interests begin to be perceived as natural and inevitable by the general public. Nobody was on the streets shouting for digital payment 20 years ago, but increasingly it seems obvious and “natural” that it should take over. That belief does not come from nowhere. It is the direct result of a hegemonic project on the part of financial institutions.
We can also learn from Louis Althusser’s concept of interpellation. The basic idea is that you can get people to internalise beliefs by addressing them as if they already had those beliefs. Twenty years ago nobody believed that cash was “inconvenient”, but every time I walk into London Underground I see adverts that address me as if I was a person who finds cash inconvenient. The objective is to reverse-engineer a belief within me that it is inconvenient, and that cashlessness is in my interests. But a cashless society is not in your interest. It is in the interest of banks and payments companies. Their job is to make you believe that it is in your interest too, and they are succeeding in doing that.
The recent Visa chaos, during which millions of people who have become dependent on digital payment suddenly found themselves stranded when the monopolistic payment network crashed, was a temporary setback. Digital systems may be “convenient”, but they often come with central points of failure. Cash, on the other hand, does not crash. It does not rely on external data centres, and is not subject to remote control or remote monitoring. The cash system allows for an unmonitored “off the grid” space. This is also the reason why financial institutions and financial technology companies want to get rid of it. Cash transactions are outside the net that such institutions cast to harvest fees and data.
A cashless society brings dangers. People without bank accounts will find themselves further marginalised, disenfranchised from the cash infrastructure that previously supported them. There are also poorly understood psychological implications about cash encouraging self-control while paying by card or a mobile phone can encourage spending. And a cashless society has major surveillance implications.
Despite this, we see an alignment between government and financial institutions. The Treasury recently held a public consultation on cash and digital payments in the new economy. It presented itself as attempting to strike a balance, noting that cash was still important. But years of subtle lobbying by the financial industry have clearly paid off. The call for evidencerepeatedly notes the negative elements of cash – associating it with crime and tax evasion – but barely mentions the negative implications of digital payments.
The UK government has chosen to champion the digital financial services industry. This is irresponsible and disingenuous. We need to stop accepting stories about the cashless society and hyper-digital banking being “natural progress”. We must recognise every cash machine that is shut down as another step in financial institutions’ campaign to nudge you into their digital enclosures.