The UK has one of the least diverse retail banking systems in Europe with a disproportionately large market share for private banks and very few cooperative, mutual or public options compared to other countries.
In Scotland particularly, bank branches have been closing at a rapid rate leaving much of the country without reliable banking services.
A model which can enable communities to found their own local bank branch providing basic but essential services free of the risky “casino banking” of the private sector is presented.
The UK has one of the least diverse retail banking systems in Europe with a disproportionately large market share for private banks and very few cooperative, mutual or public options compared with other countries. Private banks (which have no public benefit obligations to customers or communities) have been closing branches at a rapid rate, leaving much of Scotland without reliable banking services. They have also engaged in extremely risky behaviour which has put the wider economy at risk.
Having a reliable public or mutual banking sector would mean branches being returned to communities, helping to support small business development and local economies, balancing the over all risk to the economy and helping to address issues of poverty which relate to lack of banking services. There is now an off-the-shelf ‘bank in a box’ model which can enable this to happen quickly. The Community Savings Bank Association has produced a package which enables a mutual bank to be set up very quickly (as little as 18 months from start to launch). The total start-up costs of the bank would be in the order of £20 million; from there scaling and the number of branches would be dependent on the number of customers.
― The bank needs to be set up by a team with the expertise and passion to create a truly mutual bank that will work for the people, the communities, the businesses and the environment of Scotland. The initial project team (who should not, as a rule, be predominantly bankers themselves) should commit to a process of meaningful stakeholder engagement and design right across the country to ensure that the bank is created with and for the people of Scotland. Common Weal believes it should be established initially as a public project and the founding team should be supported and work in close alignment with the Scottish National Investment Bank team, who should assist in the delivery and capitalisation of the bank in association with local authorities.