Move your money: We need new models of banking, not just new banks

Introducing "competition" to banking won't work if it's just Tesco Bank taking over

Another week, another banking scandal. More tokenistic contrition from bankers, feigned outrage from politicians and protestations of ignorance from regulators. Feel familiar anyone?

But this time its different. The revelation that Barclays, and pretty much every other global bank, has been systematically rigging interest rates to bolster their profits has changed British banking for good.

Most importantly, it has broken the widespread consumer apathy that characterised our retail banking market.

Since the financial crisis there has been a steady flow of consumers out of the big 5 and into mutuals such as building societies, the Cooperative and credit unions – 2.8 million all in all.

But in the wake of the Libor scandal this trend has increased exponentially with Nationwide reporting an 85 per cent week-on-week increase in new account enquiries, the Co-operative 25 per cent and some of the smaller ethical banks and credit unions an increase of over 200 per cent.

Significantly, the other big banks have not reported a similar surge in footfall. In fact, customers are starting to leave not just Barclays but all the big banks in favour of mutual and ethical providers.

A recent YouGov poll found that 83 per cent of respondents thought "the other banks are just as bad as Barclays". People realise the problems in our banking system are systemic and so they are moving to a meaningful alternative.

There are rumours that both RBS and Barclays have been called into the FSA to discuss the number of depositors moving. People are beginning to move their money in significant numbers. That hurts the big banks which are increasingly dependent on deposits for funding as the markets dry up in the shadow of the storm in Europe.

The Libor scandal has also changed the political landscape around banking reform. This banking scandal is swiftly becoming a political crisis as the Bank of England, senior regulators and politicians from both sides of the House become embroiled.

No one should be surprised that greed and self-interest in the City has had a corrosive effect in Westminster. The sheer concentration of wealth and power in such a small number of institutions means that the establishment must do whatever it takes to keep the gravy train going – irrespective of how destructive the banks' behaviour has become. And not least of all because we rely on the banks to keep our speculative housing market inflating and thus home-owning voters feeling wealthy, despite their stagnating real incomes.

The defence mechanism on both sides of the House has been mindless mud slinging and political point scoring. Last week both parties have tried to pull back from these playground spats as it becomes apparent that they are only further eroding any remaining trust the public have in politicians to fix this problem.

This is the background against which Miliband’s speech earlier this week must be judged. In his description of "stewardship banking", Miliband cited "a banking system where no one bank feels either too big to fail or too powerful to be challenged. But where all banks face real competition and customers have proper choices."

His solution? To force banks sell off branches to create more "challenger" banks. Miliband is right to argue that there must be more competition in our retail banking sector as more competition means more choice for consumers – but it must be meaningful choice. Banks continue to close branches in low-income areas because they’re costly to run, their main value being as a sales floor for more complicated and profitable products. The only "challengers" able to buy up branches will be the ilk to Tesco Bank, or more of the same.

The traditional banking model is not working for swathes of our society. Not only small businesses but also entire communities and geographical areas, which are becoming credit deserts.

These can be profitable markets to serve. It is this market opportunity which high cost and payday lenders, which are becoming all too ubiquitous on our high streets, are taking advantage of. But there is another way.

The UK has a thriving sector of local and mutual financial institutions, from the big building societies down to local community finance institutions and credit unions. These institutions have already proved that there is a different way of doing things, and don’t need public subsidies that run into hundreds of billions.

Reforms must be focused on supporting and growing the socially responsible financial institutions already out there and already working. It must also enable consumers to drive change by making it easier to switch and forcing the banks to be fully transparent in terms of both their lending and investments and the way they market their products.

Politicians, local authorities, business and the third sector can all play an active role in this. Leading by example and moving their own accounts in order to strengthen socially responsible financial institutions as well as build trust and confidence in them.

The public have woken up to what a better banking system looks like. It may not be radical but it could be revolutionary Now its time for our politicians to do the same.

Metro Bank, a new bank launched recently. But is it a true competitor? Photograph: Getty Images

Louis Brooke is a spokesperson for Move Your Money UK, a not for profit campaign group, promoting alternatives to the big banks. He is also communications manager for London Rebuilding Society, and co-founder and chairman of educational resource company now>press>play.

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Is there such a thing as responsible betting?

Punters are encouraged to bet responsibly. What a laugh that is. It’s like encouraging drunks to get drunk responsibly, to crash our cars responsibly, murder each other responsibly.

I try not to watch the commercials between matches, or the studio discussions, or anything really, before or after, except for the match itself. And yet there is one person I never manage to escape properly – Ray Winstone. His cracked face, his mesmerising voice, his endlessly repeated spiel follow me across the room as I escape for the lav, the kitchen, the drinks cupboard.

I’m not sure which betting company he is shouting about, there are just so many of them, offering incredible odds and supposedly free bets. In the past six years, since the laws changed, TV betting adverts have increased by 600 per cent, all offering amazingly simple ways to lose money with just one tap on a smartphone.

The one I hate is the ad for BetVictor. The man who has been fronting it, appearing at windows or on roofs, who I assume is Victor, is just so slimy and horrible.

Betting firms are the ultimate football parasites, second in wealth only to kit manufacturers. They have perfected the capitalist’s art of using OPM (Other People’s Money). They’re not directly involved in football – say, in training or managing – yet they make millions off the back of its popularity. Many of the firms are based offshore in Gibraltar.

Football betting is not new. In the Fifties, my job every week at five o’clock was to sit beside my father’s bed, where he lay paralysed with MS, and write down the football results as they were read out on Sports Report. I had not to breathe, make silly remarks or guess the score. By the inflection in the announcer’s voice you could tell if it was an away win.

Earlier in the week I had filled in his Treble Chance on the Littlewoods pools. The “treble” part was because you had three chances: three points if the game you picked was a score draw, two for a goalless draw and one point for a home or away win. You chose eight games and had to reach 24 points, or as near as possible, then you were in the money.

“Not a damn sausage,” my father would say every week, once I’d marked and handed him back his predictions. He never did win a sausage.

Football pools began in the 1920s, the main ones being Littlewoods and Vernons, both based in Liverpool. They gave employment to thousands of bright young women who checked the results and sang in company choirs in their spare time. Each firm spent millions on advertising. In 1935, Littlewoods flew an aeroplane over London with a banner saying: Littlewoods Above All!

Postwar, they blossomed again, taking in £50m a year. The nation stopped at five on a Saturday to hear the scores, whether they were interested in football or not, hoping to get rich. BBC Sports Report began in 1948 with John Webster reading the results. James Alexander Gordon took over in 1974 – a voice soon familiar throughout the land.

These past few decades, football pools have been left behind, old-fashioned, low-tech, replaced by online betting using smartphones. The betting industry has totally rebooted itself. You can bet while the match is still on, trying to predict who will get the next goal, the next corner, the next throw-in. I made the last one up, but in theory you can bet instantly, on anything, at any time.

The soft sell is interesting. With the old football pools, we knew it was a remote flutter, hoping to make some money. Today the ads imply that betting on football somehow enhances the experience, adds to the enjoyment, involves you in the game itself, hence they show lads all together, drinking and laughing and putting on bets.

At the same time, punters are encouraged to do it responsibly. What a laugh that is. It’s like encouraging drunks to get drunk responsibly, to crash our cars responsibly, murder each other responsibly. Responsibly and respect are now two of the most meaningless words in the football language. People have been gambling, in some form, since the beginning, watching two raindrops drip down inside the cave, lying around in Roman bathhouses playing games. All they’ve done is to change the technology. You have to respect that.

Hunter Davies is a journalist, broadcaster and profilic author perhaps best known for writing about the Beatles. He is an ardent Tottenham fan and writes a regular column on football for the New Statesman.

This article first appeared in the 05 February 2015 issue of the New Statesman, Putin's war