Ethical banks surge in new accounts

[crankedup]

Apparently the Office of Fair Trading is to investigate high street retail banks. The Co-operative bank has been brought in as a 'challenger' bank.

[crankedup]

0a said:

Personally I don't think the split of investment and retail is the be all and end all of the future of retail banking. Banks like Northern rock managed to mess things up perfectly well without being big investment banks.

However there are issues that need addressing. Retail banking is not a particularly competitive market. The barriers to entry to opening a new bank is very high - the regulation new entrants need to go through, the need to establish a branch network and infrastructure and the real and psychological barriers to getting people to switch bank accounts. It may be more now, but very few people are willing to switch their bank accounts.

As such the industry does not compete on price, a classic sign of a market with a lack of competition. The cost of your bank account is hidden in overdraft charges, poor interest rates on balances, and cross selling crap products (PPI, packaged accounts, expensive credit cards and mortgage rates).

Addressing this isn't easy as we like our "free banking" and the first bank to scrap it and move to a monthly charge + interest payment system will take some criticism (especially if it's government owned).

A difficult one to resolve, in my opinion. As much it sounds like kicking change out into the long grass, Cameron should establish a parliamentary committee to look at options for making retail banking more competitive and to ease us away from "free banking" to a more transparant pricing system, and to make switching bank account risk free, quick and easy with defined service levels and timeframes.

We should also address the lack of financial knowledge in the general population with classes at school so APRs, credit ratings, insurance, pensions are explained to all of us at some point.

Nothing in there that I don't agree with, your last para' especially.

[heppers75]

crankedup said:

Apparently the Office of Fair Trading is to investigate high street retail banks. The Co-operative bank has been brought in as a 'challenger' bank.

Which is perhaps on one level a good thing..

However you are, to bring it to PH parlance... Comparing a 318D in standard trim to a 335D SE with all the options and assuming both should be the same price!

[crankedup]

heppers75 said:

crankedup said:

sidicks said:

crankedup said:

Agreed with your comment, although you fail to acknowledge my key point, market forces. If a business cannot deliver a product that is satisfying the customer in terms of service quality and cost they will almost always lose that customer. You know this, but the banks need to up their game now.
Years back customer loyalty was strong, customers lazy not bothering to switch accounts to alternative suppliers, those days are rapidly coming to an end and business needs to respond accordingly, as many have.

Human nature will always dictate that the customer wants to pay £x for something worth £y, where y > x

Market forces will dictate that a bank will end up changing £x plus a small amount for something that costs £x when they would really like to change £x plus a lot!

Market forces will not force banks to make losses on services they offer, at least in the long term.

Sidicks

Like I said, its market forces, any business that will not or cannot respond is dead in the water. I take your point regarding business offering sweeteners to hook customers in, been done to death but most people don't mind being offered free cash, as long as the tie in is short.

So forgive my perhaps ignorance... I quite possibly see this heading down the same road that 0% balance transfers have gone on credit cards really when you look at then unless you are going to be a rapid shifter and really stay on top of it then you will end up paying.

That is a possibility, but with more providers due to enter the market, who knows. The old order of things will certainly change, its already in progress. It will bring more choice and for those who may need a very simple basic service perhaps a smaller provider would be suited, as opposed to an all singing and dancing bells and whistles service. As I have said before, its going to be an interesting five/ten years ahead.

[telecat]

Personally I was with the Co-op bank at one time. It lacked branches, Facilities, and treated me no better than any other bank. It's treatment of me when I wanted a loan made me realise it had nothing to redeem it over any other bank, hence I left and Joined the Yorkshire.

It's so called "ethical" lending policy and support of "Green" issues leads me to look at it with a cynical eye as well. Many "environmental" investments are pretty much a "smoke screen" and will never return much unless they rely on Government subsidies. It's also pretty "fuzzy" on it's ethics. I do not consider companies that invest in Genetics for example to be generically "unsound", the same with "Global Warming".

[heppers75]

crankedup said:

heppers75 said:

crankedup said:

sidicks said:

crankedup said:

Agreed with your comment, although you fail to acknowledge my key point, market forces. If a business cannot deliver a product that is satisfying the customer in terms of service quality and cost they will almost always lose that customer. You know this, but the banks need to up their game now.
Years back customer loyalty was strong, customers lazy not bothering to switch accounts to alternative suppliers, those days are rapidly coming to an end and business needs to respond accordingly, as many have.

Human nature will always dictate that the customer wants to pay £x for something worth £y, where y > x

Market forces will dictate that a bank will end up changing £x plus a small amount for something that costs £x when they would really like to change £x plus a lot!

Market forces will not force banks to make losses on services they offer, at least in the long term.

Sidicks

Like I said, its market forces, any business that will not or cannot respond is dead in the water. I take your point regarding business offering sweeteners to hook customers in, been done to death but most people don't mind being offered free cash, as long as the tie in is short.

So forgive my perhaps ignorance... I quite possibly see this heading down the same road that 0% balance transfers have gone on credit cards really when you look at then unless you are going to be a rapid shifter and really stay on top of it then you will end up paying.

That is a possibility, but with more providers due to enter the market, who knows. The old order of things will certainly change, its already in progress. It will bring more choice and for those who may need a very simple basic service perhaps a smaller provider would be suited, as opposed to an all singing and dancing bells and whistles service. As I have said before, its going to be an interesting five/ten years ahead.

Ok but.... There are already a bunch of providers doing the very basics Co-Op and Barclays included and that won't change.. Those accounts are lacking in many things though and my personal take is that they will be reduced further to 'encourage' folks into the fee based structure.

I have said it many times my old fruit... the law of unintended consequences is a SoB and do not get me wrong I love the altruistic notions that support much of it and by and large to an extent would love for that to be all it should be, it just isn't and to use a phrase I have used before 'st needs to be shovelled and guess what, st smells'

The only people that wil get hurt by this 'carving up' are ultimately Joe Public as they will be hit with more cost and whilst you are I am sure happy to be the bigger man and say that is fine, tell that to the folks who budget penny to penny week to week when they have to add in another few hundred a year to simply have a bank account.

[crankedup]

Its been an interesting discussion and I am sure we will re-visit sometime in the not to distant future.

[heppers75]

crankedup said:

Its been an interesting discussion and I am sure we will re-visit sometime in the not to distant future.

[Ozzie Osmond]

Can anyone explain to me the difference between "ethical banking" and "Islamic banking"?

I hope it's not just that Moslems still enjoy a cigarette!

[Megaflow]

heppers75 said:

The issue of course is old chap that these lovely free services everyone gets today will all of a sudden come with a pretty hefty cost, do you think Visa Debit networks, Cash Machines and payments processing is something that comes at a zero cost?

The only reason all these services are free today is that they are subsidised through the very investment arms you wish to disassociate from retail.

Once more the law of unintended consequences should this come to light will prove a right SoB for Joe Public!

Serious question. How do the Nationwide provide free visa transactions, free cash withdrawals and free payment processing with and investment arm to cover the cost? Not only free but my Nationwide account, not my main account, comes with free travel insurance.

[heppers75]

Megaflow said:

heppers75 said:

The issue of course is old chap that these lovely free services everyone gets today will all of a sudden come with a pretty hefty cost, do you think Visa Debit networks, Cash Machines and payments processing is something that comes at a zero cost?

The only reason all these services are free today is that they are subsidised through the very investment arms you wish to disassociate from retail.

Once more the law of unintended consequences should this come to light will prove a right SoB for Joe Public!

Serious question. How do the Nationwide provide free visa transactions, free cash withdrawals and free payment processing with and investment arm to cover the cost? Not only free but my Nationwide account, not my main account, comes with free travel insurance.

I am not sure but I am guessing.. http://www.nationwide.co.uk/investments/default.ht... they have an investment arm..

[0a]

Megaflow said:

Serious question. How do the Nationwide provide free visa transactions, free cash withdrawals and free payment processing with and investment arm to cover the cost? Not only free but my Nationwide account, not my main account, comes with free travel insurance.

Zero credit interest rate; cross selling mortgages, loans, credit cards, insurance, investments (trusting customers because of free insurance); overdraft fees (£20 per month & £15 per transaction over agreed limit) and interest rate (18.9%); foreign exchange rates (2% and £1 per cash withdrawal).

Corrected as looking at bank accounts now!

Edited by 0a on Sunday 15th July 23:05

[Murph7355]

crankedup said:

I did quote the article from the Daily Mail financial pages of the 14/07/12 and Mail on Sunday 15/07/12 Back on page four of this thread I mentioned as to where the information was. The actual precise number of accounts being shifted over from Lloyds into Co-operative will be seen in the report at end of year. Meanwhile the numbers quoted already are as close as is possible to actuality. Its easy then to work out the number of existing account holders and then the 62% increase from that info'. Simple when you know where to look.

You have put 2 and 2 together and made 600k and are potentially jumping to the wrong conclusion.

The MEN article you referred to (as the foundation of your thread) noted a 42% increase in new account openings. I use the word "potentially" as it's broadly possible that they could mean they have increased their total account numbers (your calculation using the Daily Mail as the base) by 42% (600k).

For the other interpretation of the MEN figure, let's say CoOp usually had 10k new accounts opened in a week. Then the MEN stat could simply mean they had 14.2k accounts opened. Somewhat less dramatic in overall terms (as rags love big numbers, I'm surprised they haven't used the absolute figures. Then again, maybe I'm not).

Not only might the scale of the overall number be dramatically lower than you are calculating, but there is zero empirical evidence for the reason those accounts are moving. You are wanting to believe it is because man in the street is showing his angst and hatred of "unethical" banks. It might simply be that man in the street thinks he can get a better return on his money. Or got a piss poor response from a call centre and decided to switch. Or maybe it's just a seasonal type blip that any number of banks have seen.

Too many statistcs are bandied around to prove a point without much in the way of clarity as to what the stat is actually saying. It's like the 26.9% of people being enraged with a pay package. With everything that has been in the press of late, what was far far more surprising to me was that number wasn't much higher! It all depends how you read the stats.

[Ozzie Osmond]

Megaflow said:

Serious question. How do the Nationwide provide free visa transactions, free cash withdrawals and free payment processing with and investment arm to cover the cost? Not only free but my Nationwide account, not my main account, comes with free travel insurance.

That'll be the 18% APR (just 17.5% above base rate) charged to customers who don't clear their balance every month.

[Murph7355]

Ozzie Osmond said:

That'll be the 18% APR (just 17.5% above base rate) charged to customers who don't clear their balance every month.

Who will no doubt mostly be POOR people who have NO choice but to use said credit cards having had them foisted upon them aggressively by the banks who never told them how much they'd be paying.

There should be a judge led enquiry and all those evil investment (doh!) retail bankers should be made to give everyone their money back.

[Megaflow]

heppers75 said:

I am not sure but I am guessing.. http://www.nationwide.co.uk/investments/default.ht... they have an investment arm..

No need for the sarastic response...

[crankedup]

Murph7355 said:

crankedup said:

I did quote the article from the Daily Mail financial pages of the 14/07/12 and Mail on Sunday 15/07/12 Back on page four of this thread I mentioned as to where the information was. The actual precise number of accounts being shifted over from Lloyds into Co-operative will be seen in the report at end of year. Meanwhile the numbers quoted already are as close as is possible to actuality. Its easy then to work out the number of existing account holders and then the 62% increase from that info'. Simple when you know where to look.

You have put 2 and 2 together and made 600k and are potentially jumping to the wrong conclusion.

The MEN article you referred to (as the foundation of your thread) noted a 42% increase in new account openings. I use the word "potentially" as it's broadly possible that they could mean they have increased their total account numbers (your calculation using the Daily Mail as the base) by 42% (600k).

For the other interpretation of the MEN figure, let's say CoOp usually had 10k new accounts opened in a week. Then the MEN stat could simply mean they had 14.2k accounts opened. Somewhat less dramatic in overall terms (as rags love big numbers, I'm surprised they haven't used the absolute figures. Then again, maybe I'm not).

Not only might the scale of the overall number be dramatically lower than you are calculating, but there is zero empirical evidence for the reason those accounts are moving. You are wanting to believe it is because man in the street is showing his angst and hatred of "unethical" banks. It might simply be that man in the street thinks he can get a better return on his money. Or got a piss poor response from a call centre and decided to switch. Or maybe it's just a seasonal type blip that any number of banks have seen.

Too many statistcs are bandied around to prove a point without much in the way of clarity as to what the stat is actually saying. It's like the 26.9% of people being enraged with a pay package. With everything that has been in the press of late, what was far far more surprising to me was that number wasn't much higher! It all depends how you read the stats.

Sometimes I am asked for evidence, other times its stats, this time I provide both. You choose to query it all rather than post up decisive disclaimers to the facts. Not much else to be said.

[heppers75]

Megaflow said:

heppers75 said:

I am not sure but I am guessing.. http://www.nationwide.co.uk/investments/default.ht... they have an investment arm..

No need for the sarastic response...

Sorry, was not trying to be sarcastic at all really I was pointing out that like many in fact if not all Banks and I believe the Co-Op are included in this they do have investment arms.

[Murph7355]

crankedup said:

Sometimes I am asked for evidence, other times its stats, this time I provide both. You choose to query it all rather than post up decisive disclaimers to the facts. Not much else to be said.

I have posted up an opinion that you are potentially misreading the statistics that you are using to underpin your belief.

If you want me to be more decisive, I'll get off the fence and state that you are definitely doing this.

You have provided NO evidence to back up your assertion. You have quoted two unrelated articles, misread a statistic and decided that means hundreds of thousands of people (600k) as enraged as you are about unethical banking standards and have moved their accounts in protest.

How many account holders did CoOp and Barclays (and the other unethical banks) have 3wks ago? How many do they have today?

Tell you what, of you can provide those figures to back up your assertions, and if the differences are conclusive/material, I'll agree with your stance. I'll even move my account to CoOp.

If you can't, it looks like you're merely spouting hyperbole to support your own opinion. Again.

(Incidentally, I've spent 30mins or so Googling to try and prove the numbers one way or another so we can be clear on the facts, and because I'm interested. But can find nothing. Waving assertions around though, it's really your job to prove what you're saying isn't bks).

[crankedup]

Murph7355 said:

crankedup said:

Sometimes I am asked for evidence, other times its stats, this time I provide both. You choose to query it all rather than post up decisive disclaimers to the facts. Not much else to be said.

I have posted up an opinion that you are potentially misreading the statistics that you are using to underpin your belief.

If you want me to be more decisive, I'll get off the fence and state that you are definitely doing this.

You have provided NO evidence to back up your assertion. You have quoted two unrelated articles, misread a statistic and decided that means hundreds of thousands of people (600k) as enraged as you are about unethical banking standards and have moved their accounts in protest.

How many account holders did CoOp and Barclays (and the other unethical banks) have 3wks ago? How many do they have today?

Tell you what, of you can provide those figures to back up your assertions, and if the differences are conclusive/material, I'll agree with your stance. I'll even move my account to CoOp.

If you can't, it looks like you're merely spouting hyperbole to support your own opinion. Again.

(Incidentally, I've spent 30mins or so Googling to try and prove the numbers one way or another so we can be clear on the facts, and because I'm interested. But can find nothing. Waving assertions around though, it's really your job to prove what you're saying isn't bks).

Sorry, you are blinkered to reality, the info' I have posted is true and reasonably accurate, you choose to diss it because it is not fitting your opinions. You have spent 30 minutes Google time and yet cannot find anything? Use the leads I have provided for you, how hard can it be! I have also offered to post up the actual numbers of new account openings when the end of year report is published, it will only be these that are 100% accurate, meanwhile most reasonable people on a forum website accept what you seem to be unable to do.