What caught my eye this week.
I’ve been part of a small circle of friends who have debated COVID-19 almost since the beginning of the year. Before that, many of us argued about the future of cash.
My view is straightforward: cash use in the West looks set to shrink dramatically, and probably quickly. Most of my friends disagree and see that as a loss. But the pandemic has accelerated trends that were already in motion. Data now show a sharp decline in cash usage during COVID-19 and the associated lockdowns.
You can’t touch this
I hold shares in several listed and private fintech and payments companies. Since people started avoiding physical contact and treating everything that wasn’t soap as risky, the prospects for many of those businesses have improved significantly.
Some services report higher transaction volumes. Others have seen their revenue take a short-term hit because overall spending dropped, but more customers are adopting their platforms, which strengthens their long-term outlook. Examples include established payments firms and newer fintech challengers.
Recent consumer surveys back this up. People are using ATMs and visiting bank branches much less, choosing online and mobile banking options instead. The pandemic, combined with perceptions of contamination from handling cash, has pushed a significant chunk of activity online.
- ATM usage has declined substantially during the pandemic, largely because people are going out less and also out of concern about virus transmission through cash.
- Use of online banking and mobile payment apps has grown markedly, reflecting consumers shifting to digital methods.
- Phone banking shows a small drop, and branch visits have fallen sharply as in-person banking becomes less common.
The surprising thing for many organizations is how ready the cashless infrastructure already was. Once consumers tried contactless and app-based payments, adoption accelerated quickly.
Fintech to the rescue
There is a legitimate concern about vulnerable groups, especially older people, who may not be comfortable with apps, contactless cards, or mobile wallets. I share that worry, but I don’t see it as insurmountable.
With coordinated action from government and private firms, it would be straightforward to provide inclusive, low-friction digital options for those who prefer simpler tools. A state-issued contactless card combined with monthly paper statements would be a minimal but effective back-up. Better still would be well-designed, accessible digital services with robust support.
Another common argument I disagree with is that ditching cash makes budgeting harder. In fact, modern budgeting apps leave the old envelope-and-coin approach far behind. Tools that aggregate accounts, visualise spending and automate savings can make managing money easier for many people than counting coins ever did. Even mainstream mobile banks now include features that once only appeared in nimble fintech start-ups.
Three valid fears
That said, there are three valid concerns raised by opponents of a cashless shift.
First, a fully digital system needs a reliable fallback for when devices run out of battery, networks fail, or services suffer outages or cyberattacks. Until resilient alternatives exist, keeping a small amount of physical cash makes sense as an emergency option.
Second, digital payments reduce friction, which can encourage impulsive spending. That risk isn’t new — credit cards did the same decades ago — but digital systems also enable built-in safeguards: spending limits, real-time alerts, and automatic budgeting features that cash cannot provide.
Third, moving away from cash reduces privacy. Cash transactions are anonymous in a way card and app payments are not. This loss of privacy could push some people toward privacy-focused alternatives, including certain cryptocurrencies, for legitimate reasons beyond illicit use.
Noted
COVID-19 has changed far more than many expected six months ago. The decline of cash is likely to be one of the lasting shifts. For businesses and consumers, the challenge is to make the transition inclusive, secure, and resilient.
From Monevator
Our updated guide to help you find the best broker — Monevator guide to online brokers.
From the archive: Nine underrated tools to help you pursue Financial Independence.
News
The true scale of London’s economic slump has been widely reported, highlighting the city’s deep and unusual crisis (even by recent standards).
A cut to stamp duty has increased interest in commuter towns around London.
There is political debate about possible changes to capital gains tax framed as a review.
NS&I increased its net financing target substantially for the year.
Recent stories caution against the allure of quick riches touted by some home-based Forex traders.
High-frequency indicators suggest restaurant traffic patterns in the US point to a partial, uneven reopening.
Celebrity financial woes during the pandemic have made headlines, illustrating how revenue shocks can affect even high-profile figures.
An analysis re-examining diversification looked at best and worst performers across multi-year rolling periods.
Products and services
A number of retail banks and fintechs continue to roll out new account variants that include interest or rewards, and the market for low-cost investment products keeps evolving.
Some funds and ETFs have closed after fee competition squeezed margins, while others promote environmental or socially responsible exposures for investors seeking to avoid fossil fuels.
Brokerage and trading platforms still offer sign-up incentives, and the pandemic is reshaping the mortgage and property market with remote viewings and long-term fixed-rate deals gaining attention.
Comment and opinion
Opinion pieces this week include reflections on historical analogies in investing, the changing economics of buy-to-let, and perspectives on long-term portfolio construction and retirement priorities.
There are also readable takes on how workplace habits may evolve after lockdowns and why certain indexing approaches have performed differently over time.
Gold trading mini-special
Coverage of gold surged with headlines about ETF inflows and debate over whether current bullish sentiment is sustainable. Several commentators warned that extreme optimism among gold timers can be a contrarian bearish signal.
Naughty corner: Active antics
Articles flag the continuing trend of large hedge funds capturing a disproportionate share of industry profits and the role of big technology firms in driving market performance.
Covid-19 corner
Public health reporting this week included inquiries into data discrepancies, emerging research on T cell responses to the coronavirus, and record case numbers in some countries. Localised restrictions are back in force in places experiencing renewed outbreaks.
Debate continues about fatality and infection fatality rates, and some social trends include urban residents reconsidering living arrangements in response to pandemic risks.
Kindle book bargains
Several popular titles are currently discounted on digital platforms, offering accessible reading on topics from nature to behavioural economics and financial history.
Off our beat
Features this week covered visions for car-free cities, practical ideas to break up workweek monotony, environmental perspectives on overtourism in Asia, and personal stories about relationships and life choices during difficult times.
And finally…
“Lost time is never found again.” — Benjamin Franklin, Poor Richard’s Almanac.
If you enjoy this weekly roundup, consider subscribing to receive it regularly.
- Affiliate note: some links in the original may have been affiliate links. If you register via some referral programmes, the author may receive a small reward.
- Access note: some news articles referenced originally may require specific desktop views or search results to access without a subscription; access paths vary by publisher and device.