Access to basic banking facilities is an essential part of modern life, as employers and government agencies move away from cash and cheques towards electronic payments. Small and micro businesses are also affected by difficulties in accessing basic affordable financial tools, often relying on easy access to bank branches to bank cash safely.
Effective tools for savings, payments, and accessing credit and insurance can help people to climb out of poverty or get through a crisis or emergency without falling into debt. They can help businesses survive and grow and not slide into bankruptcy should a crisis occur.
The UK has made real progress in ensuring that most adults have, at least, some form of bank account. It is estimated that only 3% do not. This is broadly in line with European neighbours such as Germany, France and Slovenia. It also compares well with others such as Poland (30% without access to a bank account) and Italy (29%). Still the 3% in the UK, some three million individuals, are effectively financially excluded by a lack of access. And access to other types of financial tools remains patchy. 59% of UK households have savings of less than £5,000 and 56% of the poorest households do not have home content insurance.
In June 2014, the Community Investment Coalition (CIC) launched its Community Banking Charter, which championed a fresh approach to banking in the UK. The charter is particularly distinctive because it was road-tested in low income communities committed to tackling financial exclusion.
Specifically, the Charter states that every household, adult and business has access to the following basic financial tools:
- A basic transactional bank account;
- A savings scheme;
- Access to credit;
- Physical access to branch banking facilities;
- Insurance; and
- Independent money management advice.
We are delighted that the Finance Innovation Lab has decided to sign up to the Charter. CIC’s Community Banking Charter complements the Finance Lab’s very own Charter for a New Financial System, which advocates increased competition and diversity within retail banking that allows for new entrants and multiple ownership models including mutuals, credit unions and local banks.
With just six months until the next UK General Election it is important that the three main political parties make firm pledges to the electorate on how they intend to tackle these issues. For instance, at their annual conference in October, the Liberal Democrats voted to support measures that will increase diversity in the banking sector, encouraging real alternatives to break up the monopoly held by big banks.
If would like to endorse the Charter do let us know. You can reach us at: firstname.lastname@example.org.