When Ireland’s second-biggest bank, Allied Irish Banks, abruptly announced this month that it was shutting down cash services at 70 of its 170 branches, the management of Ballinamore Séan O’Heslins was incensed.

Custodians of the Gaelic football and hurling club, which is based in the northwestern county of Leitrim, said they were concerned that rural communities, including their own, would be cut off. They demanded that the bank dump its sponsorship of the Gaelic Athletic Association, the ruling body for Gaelic sports, unless it was prepared to live up to its “Tough Can’t Quit” advertising slogan.

Ballinamore Séan O’Heslins took to Twitter, adding its voice to an outcry from politicians and customers. Within three days, AIB had backtracked. “We got it wrong,” chief executive Colin Hunt admitted last week, as the bank, in an interim report entitled “backing our customers”, reported a 74 per cent rise in first-half net profits. “The lesson for us from this,” Hunt concluded, “is that we moved far too far, far too fast”.

Ireland’s high-street banks have indeed moved very far since the government pumped in billions to rescue them in 2008 in Europe’s biggest banking bailout. So, too, have their consumers. The latest European Central Bank SPACE survey on cash and card use found the Irish were dumping the use of cash to pay shops, restaurants and other people at the third-fastest rate in the EU. That study predates the pandemic, so the trend is likely to have accelerated when the survey is updated at the end of this year.

But tellingly, the SPACE report also found that Irish customers remained very attached to cash. While they used plastic slightly more often than the EU average, 57 per cent of the value of their payments was in cash — well above the EU level of 48 per cent.

AIB says its clients’ habits are changing: just 35,000 customers a day visit branches; ATM withdrawals have fallen 36 per cent and use of cheques by 50 per cent in the past five years, while in-branch teller transactions dropped 50 per cent and online payments surged 85 per cent.

What the bank discovered last week, however, was that even when following the market trend in Ireland — whose fast-growing economy has been rehabilitated after the Celtic Tiger boom turned to bust more than a decade ago — the cost of going cashless is still too high a price to pay.

AIB’s first-half operating expenses rose 10 per cent, outstripping an 8 per cent rise in operating income, and its cost-to-income ratio remains above the EU average, so perhaps it cannot be blamed for looking for efficiencies.

Given that the state still holds 63.5 per cent in the bank, a slimmed-down structure might also seem like value for money for the taxpayers who propped it up after the crisis. AIB expects its return on tangible equity, a key performance metric, to beat its 9 per cent goal in 2023.

Ballinamore Séan O’Heslins, however, slammed the cashless plan as “profit maximisation by an organisation that was bailed out by the government using revenue generated by the very communities they are now deserting”. But one senior official in the sector, who asked not to be named, replied: “If the state wants its money back, banks have to be allowed to be run on a commercial basis.”

The problem was that AIB’s cashless scheme, which apparently caught some in government by surprise, came at a politically-delicate time as ministers were thrashing out a deal on contentious cuts in climate emissions from the farming sector that upset rural constituencies. “This had nothing to do with the issue [of going cashless]. It had everything to do with politics,” the official said.

The debacle was, nevertheless, more bad news for a bank recently hit by a record fine for overcharging mortgage holders in a sector-wide scandal. Davide Romelli, an economics professor at Trinity College, said it should be “a wake-up call” as traditional banks look slow to innovate compared with fintech and mortgage rivals that include Revolut and Avant Money.

Ireland’s banking sector is already in the process of rapid change as AIB, Bank of Ireland and Permanent TSB absorb the customers and business of Ulster Bank and KBC, which are quitting the market. But with the latest survey by the Irish Banking and Culture Board highlighting “deeply ingrained” negative attitudes to banks overall and “minimal trust” in rural Ireland, AIB, and others, still have their work cut out.