Bank mergers, the search for efficiency in the commercial network and digitization have prompted financial institutions to reduce their offices in Spain. Since 2008, the number of branches has fallen by about 50% and the total number of ATMs has been cut by 20%, according to data from the Bank of Spain. But the reduction in access to banking services, especially cash, has not had the same impact in all regions.
The Bank of Spain has calculated in an analytical article published today the degree of vulnerability in terms of access to cash that the national population has. The institution considers “that there is a greater degree of vulnerability in access to cash when the supply, measured in terms of access points to cash, is not located in the places where there is a greater need to use this means of payment ”. To do this, he has developed an index based on four variables. “Individuals of older age, lower income and lower educational level use cash as a means of payment more frequently than the rest of the population,” the supervisor also states regarding the demand.
Among the main conclusions is that the majority of citizens live in localities with a very low or low level of vulnerability. However, around 3% of the population is in medium or high values of this index in terms of access to cash; this equates around 1.3 million people.
«Around 340,000 people live in municipalities with high vulnerability (0.7% of the Spanish population). These municipalities are characterized by not having traditional points of access to cash, the average distance to the nearest one is 9.4 km, the population over 60 years of age exceeds 40% of the total and disposable income is below the average national ”, says the document. In general, they are small towns with an average population of 400 inhabitants. Likewise, about a million people live in municipalities with a medium vulnerability: «On average, they have 0.6 access points for every 1,000 inhabitants, the average distance to them is 3 km, the percentage of the population over 60 years of age it exceeds 35% of the total and disposable income is below the national average ». Here the average size of the towns grows to 1,700 inhabitants.
The provinces of Zamora (18.7%), Ávila (13.6%) and Salamanca (10.6%) they have the highest percentage of their population in a highly vulnerable situation. If the grade is lowered to medium, Orense (27.2%), Lugo (26.4%) and Zamora (17.1%) are the regions where the largest population compared to the total of the province is in this situation.
The Bank of Spain points out that in Spain, despite everything, a high percentage of the population has a cash point at a relatively low distance. In this sense, 1.2 million people did not have a traditional point of access to cash in their locality at the end of last year. “It is concluded that more than 98% of the population has a traditional point of access to cash within a radius of 5 km”says the report, although it explains that there are notable differences between provinces. Zamora and Ávila, for example, have the lowest population ratios with a traditional point of access to cash within a radius of 5 km (81% and 85%, respectively). On the other hand, if a radius of 10 km is taken as a reference, access to this service in a traditional way is almost 100% on average in Spain.
Alternative access to cash
The banking supervisor considers that the trend towards office closures and the search for efficiency with modifications in the commercial network will continue in the coming years. This is why it also emphasizes the value that alternative methods of access to cash could bring.
As the first example of a ‘solution’ to financial exclusion, the Bank of Spain points out the use of credit establishments Post to provide cash (and other) services. This is an option that is already underway in Spain, for example, Banco Santander, which has been leading in this segment with its pioneering alliance with this company. “In countries like Ireland, the United Kingdom or Australia, the use of post offices for this purpose is very widespread in rural areas. In Spain, the use of this infrastructure to withdraw or deposit cash is still rare. However, if its use for this purpose becomes widespread, and taking into account its wide dispersion and capillarity in the territory, Post offices could be complementary access points to branches and ATMs “, says the document, for then point out that the use of Post Offices would increase access to cash within a 5 km radius to 99% of the population.
The institution also mentions alternatives such as ‘ofibuses’ (where Caixabank is a pioneer), the withdrawal of cash in commercial establishments and the use of tobacconists and lottery stores (Nickel, a neobank, is at work in the latter). Even so, the Bank of Spain is aware that all these alternatives are only supplements with limitations and that, therefore, they cannot completely replace traditional services.