Banking in the Community (Member NPF Submission)

The following policy suggestion has been submitted to the National Policy Forum by our member Robert Feige:

“BANKING in the COMMUNITY” POLICY

Relevant for: BANKING SERVICES: ACCESS – CHOICE – MINIMUM SOCIAL RESPONSABILITY 

The Labour Party has recently announced a provisional policy to oblige Banks to keep High Street and local branches open. A legitimate and worthy goal, reflecting the unwritten social contract whereby Banks provide a “minimum public service” – notably for the elderly and others who lack access to personal computing  – in exchange for public support in times of difficulty. From a Christian perspective, helping the elderly and poor is one of society’s highest duties.High_Street_Banks.jpg

However, some concerns are already being expressed about the way in which this new Labour policy might be implemented. A purely coercive approach (with imposed rules) is an easy target for criticism, and is unlikely to attract wide support.  If possible, better to give Banks and customers a choice.

In examining this issue, an important parameter is “Internet Creep” – the process by which Banks progressively impose online services on customers, in the (broadly legitimate) pursuit of higher profits and/or greater efficiency. Unfortunately, the human and social dimension tends to get forgotten – customers are not really given much choice. As we have noted, this trend is particularly difficult for the elderly to cope with.

“Internet Creep” is a UK business reality (and cannot be wished away) – but has been encouraged by an acquiescent policy environment which has failed to actively promote alternatives. Because business decision making is heavily influenced by “brand image” and cost considerations, this is where policy makers should focus. Arguably, high street banking and internet banking are increasingly differentiated, and this also opens up options for policymakers.

Policy Recommendation:  For personal customer business*, new legislation will offer UK Banks a binary choice between trading as either a “Full Community Service Bank” or a “Limited Service Bank”.

Banknotes.jpg“Full Community Service Bank” – this obliges the Bank to maintain open an agreed number of High street branches and services relative to (say) total deposits and customer base. “Full Customer Service Banks” will benefit from certain government measures in times of financial crisis, and will pay a normal tax rate of “T”. Importantly, they will be allowed to advertise as “Full Community Service” institutions.

“Limited Service Bank” – for those Banks who decide to significantly cut back their High street presence and staff, and to focus on cheaper electronic delivery (effectively outsourcing many tasks to customers).  “Limited Service Banks” are opting out of the traditional “minimum public service role” to their communities. As a result, LSBs will have lower levels of government support in times of crisis, and could pay a slightly higher tax rate of (say) “T”+3%.  Their status as a “Limited Service Bank” must be specified on websites and in documentation. 

Note – importantly – that both Banks and their customers remain free to choose. The policymaker is constructively imposing clarity of the business model, which will provide greater visibility for individual customers. Customers opting for a “Full Service Bank” will have a high degree of assurance that their Bank will continue to provide familiar High Street services for the foreseeable future. The less attractive “Limited Service” label, associated to a slightly higher level of taxation, may encourage some Banks to think again about branch closures and staff redundancies.

* note that business/corporate banking is a separate issue.

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As we enter the final days of the General Election 2017 Campaign, we want to continue to bring our nation, our government, our communities and the General Election to God in prayer: because we believe God wants us all to prosper and bring glory to his name.

Entries will be posted here daily, from Monday 29th May until after the election. Many thanks to our member Hazel for her time and dedication preparing the entries for us to think and pray on.

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