Retail forex rates are very low in the UK from what I remember because of the closeness with other countries and how many euros/kronas/francs etc can be moved and how much the market can handle. I've seen rates being well advertised and it's likely because they're offering lower rates than what's available from banks (even without bank fees factored in - although I think they also tried to nullify theirs if you order in advance). My guess here is that banks and larger institutions try to run off trust - it works out well for them with the older generations.

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Cash makes me more aware of what I'm spending (or it used to when it was paper). There's a cost to using cash and that cost of change. If you're trying to save money and budget better with it then sure use cash and you could probably save money even if you donate the excess (if you're bad at budgeting or really impulsive) but for a lot of people I don't think this is the case.