New services will become available to meet the cash needs of consumers and businesses, a boss at the City regulator has said.

Sheldon Mills, executive director for consumers and competition at the Financial Conduct Authority (FCA) was speaking at a “cash summit” hosted by consumer group Which?

He said: “Over the longer term, we believe that new services will become available to meet the needs of consumers and businesses alike.

“Shared branches, cashback and deposit points might become commonplace in some areas, while more consumers embrace digital technology, and many use less cash.”

Mr Mills said research has been taking place into people’s access to cash.

The FCA intends to publish an updated assessment of the UK’s cash infrastructure in July, alongside consumer research.

Mr Mills said: “Based on our evidence, we believe that access to cash across the UK is generally good for most people.

“Ninety-five per cent can access cash in urban areas within 650 metres and in rural areas within 3.5km. Only around 150,000 people live more than around 5km away from their nearest access point.

“And of course, in addition to bank branches, Post Office counter services and ATMs provide a significant and important part of the existing geographic coverage.”

Mr Mills said that while firms must comply with competition law, there are opportunities for the industry to collaborate to find solutions to maintaining access to cash.

He continued: “We also welcome the wider financial services industry actions to identify new ways to support local community access.

“This can build on the work already under way through the Community Access to Cash Pilots. Innovative new methods such as banking hubs and cashback without a purchase are already being piloted across the country and we are keen to see the outcomes of this work and how these solutions can be applied more widely.”

We know that many are still reliant on cash and they should have the choice to continue to do so

Cash use plunged in the early days of the coronavirus pandemic, with some stores discouraging shoppers from using it.

However a Bank of England study indicated that the risk of getting coronavirus from banknotes is low.

The FCA’s financial lives survey in 2020 found that five million adults use cash for most of their purchases.

The regulator said that following a fall in ATM withdrawals of 40% year-on-year across 2020, withdrawals have started to increase again since coronavirus restrictions have started to ease.

The FCA and the Payment Systems Regulator (PSR) have said they expect individual firms to protect the ability of their customers to access cash and other services that meet their needs when they close branches.

Which? announced on Thursday that major retailers have signed up to a cash acceptance pledge, helping to ensure that customers who want to pay in coins and banknotes will not be excluded by the transition to digital payments.

Aldi, Asda, Co-op, John Lewis, LloydsPharmacy and Waitrose have made the public commitment to keep accepting cash in their stores.

Which? is inviting all retailers, large and small, to sign the pledge.

Mr Mills said he remembered as a child how his mother would ensure that “we were able to know down to the last penny how much we would spend on food”.

He added: “Budgeting was essential and cash helped with that.

“Now there are budgeting tools to support that, supermarkets have tools in store so you can monitor your spending as you shop. Online shopping can do the same. But we know that many are still reliant on cash and they should have the choice to continue to do so.”

Last year, the Government said it would legislate to maintain access to cash in the long term.

John Glen, Economic Secretary to the Treasury, said a consultation on legislative proposals would launch this summer. There would be proposed requirements to ensure people and businesses could access cash withdrawal and depositing facilities within reasonable travel distances.

He said: “As you’ll be aware, at present, industry, notably banks, play a key role in ensuring these facilities are available, whether through branches, or by funding customer transactions at ATMs or Post Office counters.

“And we expect them to continue to do so under our approach. Our consultation will therefore set out proposals on which organisations should be in scope of the legislation.”

He added: “As we’ve previously indicated, the Government believes the FCA would be best placed to play a leading role in holding firms to account on access to cash, so that the needs of consumers and businesses are met.

“And our consultation will therefore seek views on proposals to ensure the FCA is properly positioned for this role.”