The Political Institute of Action Research

May 2024
Authors: Safi Alnaqib, Lila Lee Peschong, Sofia Saba, Ana Ross
Edited by Nina Harbison

EXECUTIVE SUMMARY

In the last decade, there has been a significant shift in banking practices away from cash payments to online banking services. Additionally, the Covid-19 pandemic starting in 2020 led to a change in economic policies meant to combat growing inflation and poverty rates exacerbated by the pandemic.[1] Although many of these policies were put in practice to help those struggling financially, the shift to online banking has led to an increase in financial exclusion for older, disabled, and homeless populations. To illustrate the challenges and benefits associated with online banking amongst the homeless population, this paper will be examining the components of cash and credit use in an increasingly cashless society, specifically in the United Kingdom and Europe. Furthering this, the advantages and limitations of online banking will be explored through the policies and services implemented by banks and charities. Much of the data published on these issues has been qualitative and based on surveys. Due to this, the information gathered will primarily be utilized from secondary sources through systematic review. There have been a wide variety of publications and reports regarding homelessness and online banking accessibility in recent years. In this report, we will refer to sources published by government agencies, non-profit organisations centred around the issue of homelessness, and statistical data to illustrate the marginalisation and discrimination that the homeless population faces in the financial sector.

Considering credit, the vulnerability of homeless individuals is exemplified in a ‘harvest economy’ where short-term money spending is a priority when one is ‘sleeping rough.’ The turn towards a cashless society has led to a greater sense of security when it comes to saving as well as easier ways and more accommodating resources for budgeting. The switch to cashless transaction has similarly helped charities raise money for their cause. One of the main issues surrounding credit-based commerce is the danger it poses to those experiencing domestic and economic abuse. Those who are experiencing this situation have found it difficult to escape when the economic abuse can be tracked more easily. Similarly, credit debt of an abuser may be transferred to a victim in certain situations and can result in further technological abuse and a lack of funds designated to escape from a harmful situation.

In the UK, the number of cash-based services and transactions has drastically decreased. This has similarly led to further financial and digital exclusion for individuals facing homelessness. The main issues pertaining to this include the difficulty in opening a bank account, the inaccessibility of cashless payments, the refusal of cash as a form of transaction, lack of digital resources, and a decrease in cash donations. Past research has shown that the turn towards a more cashless environment has been harmful to the stability and inclusivity of homeless people, yet some suggest that this shift could mark a turn towards placing the responsibility for this on policy makers, governments, and banks.

The benefits and limitations of credit in a cashless society are extensive. For those experiencing homelessness, the implications of online banking are often associated with a lack of address and exclusion from technological practices. However, HSBC and similar banks have implemented programmes which aim at tackling the gaps which prevent homeless individuals from opening a bank account. Through these programmes, the accessibility of online banking is much more apparent. Still, there are limitations for such policies, namely the opportunity for missed correspondence due to a lack of address as well as an exclusion from the necessary technological advancements used to open and sustain a bank account, such as computers and tablets.

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[1] The World Bank, “Chapter 1”.