Money Box Live: Banking

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BBC Sounds. Music, radio, podcasts. Hello. Banking in the UK is going through a transformation. But in today's Moneybox Live podcast, we're asking if it's working for everyone. Do you prefer to deal with a bank in person, in an actual building, on the actual high street? Or do you prefer it on your phone, where your finances are at your fingertips and you don't actually have to talk to anyone? We've been asking shoppers at a retail park in Salford how they're doing it.

Online. Work off the app. I don't think I've actually gone in to use a bank for a very long time. Don't really use cash. Online mostly. Rarely have to go to the branch. Well, digital clearly works for those people. But at Moneybox, we know it doesn't work for everyone. And that's what we're talking about on this week's programme. We'll also be chatting to the man behind the Bank of Dave, whose unlikely life story is now amazing. a major Netflix film.

So I started lending to people. They paid me back. And I thought, this banking malarkey is not that difficult. Now, joining me today to talk about banking in the past, present and future is the economic historian and author, Dr. Victoria Bateman and independent banker.

Banking analyst Frances Coppola. Good afternoon. Good afternoon. Thank you both for joining us. Victoria, before we look ahead, tell me a bit about the history of banking. What's the earliest thing that we would recognise as a bank in this country? Well, historically, banks only really served the needs of the wealthy until in 1798, Priscilla Wakefield set up the country's first savings bank for ordinary people. And she did that in Tottenham in London.

Now, she couldn't afford a fancy building. So instead, she simply set up a bench in her local school where people could come and find her and hand over their savings. for safekeeping. And this would have been accessible to lots of different people, would it? This would have been a sort of affordable option? That's right. Now, her key focus was really...

women and children. So everything really from factory girls to domestic servants, and they could open a savings account for as little as a penny. We're quite used now to the idea of keeping money in a bank. Was it hard to build that trust in those early days? Oh, it absolutely was. Do you know, by 1817, there were about 100 of these savings banks across the country, but the system was rather unstable. Some of these banks were quite crisis prone and not...

all of them were as reputable and as responsible as Priscilla Wakefield's own. So there were banking crises going on throughout the 19th century, and that led to a loss of trust in the system. You know, people not wanting to... hand over their savings to banks. And so really two things happened. First of all, the government decided to act and so brought in regulations in an effort to keep people's savings safe.

And banks that managed to survive the series of banking crises began to join together to form a smaller number. of bigger banks. So the banking system really evolved in that time. So it became more secure. Thank you very much. Stay with us. I'm so interested in the history of this. But Frances, we'll talk about banking closures in just a moment.

I want you to be our ghost of banking future. Are you seeing changing trends in banking that could mean it all changes again in the next 10 years? Not really. I think that the... We saw a bit of a shakeout after the financial crisis of 2008 when actually we lost our middle-sized banks mainly. The small banks mostly survived and the big ones got bailed out. mid-tier that got into difficulty. And that's kind of the space...

in a way the challenger banks were trying to step into, particularly things like the supermarket banks, which often don't get regarded as challenger banks, but they are. And they have repopulated that space to some extent. But whenever there is any kind of radical change in banking... sort of...

usually triggered by a crisis, it tends to be that middle tier that we lose. So if anything was going to happen, if we had another crisis, we might lose it again. But I don't really see a shift away from this kind of big bank, small bank equilibrium.

that we've really had for a long time. It's interesting talking about challenger banks. Gerry's been in touch talking about bank closures and said, it's sad that this is the future. That said, I'm now thinking of going to a bank like Starling with zero high street presence. Open banking. really said that rather than always having to work through your own bank's face to the world through its own online banking app, you could...

interact directly with your bank through third-party applications through online websites. And you could see, if you had balances in different banks, you could see them all in one place through a third-party app. third party providers to get access with your consent to your banking data.

Well, Sam has tweeted to say, get the feeling a lot of people don't realise the extent of which banks and other financial companies use open banking, like paying off a credit card and using the easy transfer function.

Keep your thoughts coming. Now, a lot of people, as I said, they get in touch with us about bank branch closures and they're really not... slowing down. Just last week, Barclays announced 18 branch closures and Lloyds Banking Group is shutting 45. 22 of those are Halifax, four are Bank of Scotland. And then mobile banking, which is where a branch comes to your community. I have to go to Meadow Hall to put my business account checks in.

It's time consuming. It's a long way. I'm quite indifferent to it. I don't bank with any traditional banks. It has no effect on me. I think just in general bank closure just a nightmare. I've got a sister who's a bit older who is not okay to do online banking she doesn't like doing it so for her it's massive.

Lots of similar thoughts, actually, like that coming into our inbox. Graham has emailed as well to say, how are we supposed to manage without a banking presence in our towns? And here's another of our listeners. Hi, I'm Rene. I live in Bristol. I'm just concerned about what I can do when my bank branch closes. I've got a regular pension coming in and direct debits going out. They tell me...

and go to post offices. But it's going to be a bit awkward. And I'm just wondering, you know, should I change my bank? Would it be easier for me? I have got an account in another bank. Or are they all going to be the same? that's my that's my dilemma

Frances, lots of worries about branch closures. Barclays told us visits to branches are just continuing to fall and that people can bank in other ways. And it's similar for Lloyds, which says people who want to bank in person can use the post office, for example. question, is it worth just switching to a bank that still has a physical presence in her town?

Well, it's a bit of a lottery because, as you say, bank branches are continuing to close and this is going to be a continuing trend, unfortunately. So, in a way, you're trying to judge which... bank is going to be the last bank standing in your town or whether it's going to be the post office which ends up being the banking hub for everyone so yeah by all means if your branch is closing you can

switch to another bank but I wouldn't say that I wouldn't necessarily ensure your banking presence for the foreseeable future. Now, a lot of us do bank online. Margaret's emailed to say that keeping up with technology and the cost of it can be tough. And of course, in some rural areas, just getting an internet connection can be a challenge. What can people do then if they can't go digital?

It's really extraordinarily difficult. And I think there are two groups particularly. I mean, your point about rural areas is very well made because getting broadband signals in some areas is immensely difficult and how you're supposed to use a mobile app or something if you can't get a signal. So, as I've said, post offices are supposed to provide banking services across different banking.

for a range of banks. So if you have a post office within reach, you can do basic banking through that. And often there are ATMs, even when there are no... so you can still get cash out. Obviously, putting cash in is maybe a little bit more problematic.

I think the group's particularly affected like this. We talk a lot about elderly people and people who have difficulties in digital technology, and I'd like to see banks doing more to help those people. And the second group... this was mentioned in by one caller earlier is small businesses we still do use cash and checks in this society and while we continue to use those small businesses will continue to need to have access to banks

within working hours, you know, without taking hours out of their working day, to actually put in cash and cheques into their banks. Otherwise, you're pushing the responsibility for keeping cash safe.

back onto small businesses, which is actually really quite dangerous. Lots of different kinds of challenges. Listener Michelle from Staines says she doesn't use banking apps. If I lose my phone and I'm either way on holiday... or in a place where I can't actually access banking quickly, then I'm in a really awful position, and then what on earth do I do?

This is a really important point, isn't it, Frances? I mean, now that your phone can carry around your various banking apps, people can access an extraordinary amount of stuff through them. They can, although I think that, particularly with advanced security on phones, biometric security, banking apps themselves can be quite secure. My bigger worry is actually about wallets.

and also contactless cards. You can actually lose a significant amount of money on a contactless application or using your phone wallet through near-field technology before you even know it's gone. And I do think that people perhaps... need to be more aware that if they're using wallets on phones you know leaving your phone around somewhere you wouldn't do that with your wallet your actual physical wallet with cash in it so why would you do that with a phone that has your your card wallet on it

It's a very, very good point. Now, lots, lots of listeners are getting in touch, including Theo, Raz and Ian, to say they struggle with bank closures because of that point you were making about businesses. They need to be able to pay cash in and get cash out. Now, one option. might be a banking hub. This time last year, Moneybox visited one in Cottingham in Yorkshire on the day that it opened. I declare the centre, this hub, open. Thank you.

Did you manage to use the banking hub? Oh, yes, yes, very good. Somebody had a real bright idea, didn't they? Very good idea. I was going to keep fit and my car froze and I couldn't get there in time. And I thought, oh, I'll do the banking hubs open. And I needed to do credit transfers for better presents. And here I am.

Well, they certainly sounded very happy about it. Back then, we spoke to Kat Farrow, Chief Operating Officer at Cash Access UK, which is an organisation that sets these hubs up. And she joins me again now. Kat, good afternoon. Hello, good afternoon, good to be back. So for anyone who's not yet seen a hub, because they're certainly far from everywhere, what are they? How do they work?

So a banking hub is essentially a shared banking space on the high street where customers of almost every bank can go in and carry out their basic cash transactions over the counter. withdrawing cash, paying cash in, paying in checks, paying some bills, account inquiries, those sorts of things. But the key thing that the Banking Hub offers, as well as the counter, is a private space for customers to come in and talk to their own bank.

face-to-face. So what happens is the banks take it in turns to come into the hub. So you might have a Barclays on a Monday or a NatWest on a Tuesday throughout the week, Monday to Friday. And that really gives people the opportunity to go and have those slightly more complex conversations they might need to have with their own bank.

This sounds absolutely wonderful. How many are there? 26. Not many. Well, we've been, as you say, been up and running a year now as a company. It takes up to 12 months really to get a hub open. finding a building and making sure everything works and refitting it and all of those quite complicated things. But we are opening them more every day. So we've got another one opening tomorrow and Prestatin, the first one in Wales, which we're delighted about.

Northern Ireland today and five more next week so by Christmas we're going to have 30 yeah lots more ribbon cutting ceremonies lots more ribbons I want I want to put a message to you we've had from Pippa in Wells she's emailed talking about

going to her local community centre, which was providing a banking service. She was very frustrated by that because they couldn't help her because she hadn't brought her mobile. But she wants to know why old bank branches are standing empty and unused when they could be used as hubs. It's a really good question. We do sometimes use former bank branches as hubs. They're not always the best option, though, to be honest. I mean, banking hubs… They have a bit of a history, though.

They do. They certainly do have history. And some of them are very beautiful, as we know, very, very imposing buildings. But the thing about banking hubs is that they are not massive. They're relatively small buildings on the high street. But they do what they do and they're quite simple, quite small and location is absolutely everything. So we try and make sure that they're really accessible for the community. So hopefully up to 30 soon.

If communities don't have one and they want one, can they ask for one? They can, yeah. So there are two ways. Will they get one? Well, if they qualify, yeah. So there's a really easy way of actually asking for your community to be assessed. You need to go to the LINC website, link.co.uk, and you can ask for a community.

assessment and what link will do is they will come they will look come and look at your town or your community they'll actually walk the streets they'll look at what it's like they will look at the data around who lives there how far away it is from the nearest branch they'll actually get on the bus to check how long it takes to get somewhere. And then they will make a recommendation as to whether the community would benefit from a banking hub.

Now, we've had a message on Twitter from Colin in Stockport who says, I recently changed banks. One part of the process asked me to visit my local branch with photo ID. I live close enough to a town centre branch so I could, but what happens if you don't and the local branches close? have a branch or a hub, what can he do?

I think for things like providing evidence of identity, I think it does vary from bank to bank. So I wouldn't want to say anything misleading there. But you can certainly do that in banking hubs where you've got community banker present. You can go in and prove your identity. Unfortunately, if he doesn't have...

a branch or a hub very locally, then there might be a little bit of travel involved, it sounds like there. Bit of a trek. We need more hubs. Thank you. Kat Farrow from Cash Access UK. Thank you very much. And on bank closures, on this general issue, UK finance... which speaks for banks, told us.

Much the same as what Barclays and Lloyds said, that growing numbers of people are using telephone, mobile and internet banking, and that people can do a lot of day-to-day banking at thousands of post offices around the country and, of course, those shared banking hubs. And they said significant ongoing investment...

is being made to provide those hubs with banks like Lloyds and Barclays alongside free ATMs and cashback without purchase. Lots going on. Is it working for you? You can still get in touch. Let me know.

Now another alternative to banks, of course, are credit unions. These are typically not-for-profit cooperatives that offer savings and loans. Our reporter Ima Devlin has been to visit one in Ballyhackamore in Northern Ireland, which has been going for more than 55 years. I'm just outside Ballyhackamore Credit Union on the Upper Newton Arse Road. It's a bright but crisp morning here in East Belfast. Credit unions are an alternative to traditional lenders like banks and building societies.

Here the atmosphere is welcoming, the Christmas trees and twinkly lights are up. My name is Janet Booker and I'm the manager here in Ballyhackenmore Credit Union. So we have a real cross range of members. We have people who are on benefits, we've got middle-income families and we've got high-income families. So we're member-owned and we're

not-for-profit organisation, any surplus that we make at the year-end is paid back to our members. So that's what really makes us different from a bank. You know, you can say, oh, so-and-so walked into the credit union like they own the place. Well, they do.

There's a steady flow of customers in and out today. And one of those people who own the place, as Janet says, is Morris. There was one period where I was out of work and I found things just a little bit... stressful and getting a loan was very easy and that was so helpful. at that period of time. And as the cost of living squeeze continues, Janet tells me the way people are borrowing has definitely changed.

We are seeing a big increase in people coming in just to borrow money to put food on their table, to put heating oil in their oil tank. For some, it can be a real lifeline when unexpected costs come up. I don't know what I would do without it at times.

I had a car crash I came straight down two days later and got my money and got another little car A glowing endorsement from Alison Credit unions can't lend to everyone but if members are struggling they can refer them to organisations who might be able to help. And you can hear more from Ima on Saturday's Moneybox in midday. She's been finding out about energy loans they're offering, specifically this winter. Frances, we heard that Alison got a loan for a car.

What do people need to know about the difference between a credit union and a bank? Well, I think you mentioned it earlier that they are owned by their members and they're also limited. They are bonded to a particular area, a geographical area. to a particular industry and only people who live in that area or work in that industry can bank with them and that means they can work much more closely with their communities and so they're able perhaps to lend to people that ordinary banks wouldn't.

and also to local businesses and things like that because they're working much more closely with their communities. Thank you. Victoria, Dr Victoria Bateman, still with us. Is the idea of credit unions a new one? Well, I would say the first modern credit union really developed within the Caribbean immigrant community in the 1960s in Hornsea in London, and really in response to the discrimination faced by...

the Windrush generation, you know, lack of access to loans and when loans were available at much higher interest rates. It's interesting to hear the history of it. Thank you very much.

Banking sounds certainly to me more suitable for a Moneybox Live topic than a blockbuster. But actually, the story of a man who set up a business offering saving and lending in his community has just been made into a Netflix film. Morning, Hugh. A man wants to open a bank. No. This isn't going to amount to anything. Come on. We're lawyers. We're on the side of whoever's paying us. He's a lawyer and he's from London, but don't hold that against him. You would like to open a bank? A bank?

of Dave. It's catchy, very catchy. The Dave in question is Dave Fishwick, who is played by actor Rory Knier in the Bank of Dave film, which shows how it was launched in the wake of the 2008 financial crisis. I spoke to him a little before we went on air. And I started by asking him why he set up Burnley Savings and Loans.

well there's a real need for community banking run by the community to benefit the community rather than the bonus culture and i had a real problem at the minibus garage where people were coming to me for finances they had done for years I used to fill the paperwork in, send it off to the bank. The bank used to pay me for the bus and people would get the bus.

However, that stopped overnight. Banks just stopped lending. So I thought, well, can I do a better job? So I started lending to people. They paid me back. And I thought, this banking malarkey is not that difficult. So then I thought... I wanted to open a community bank that helped other businesses and other people. And that's how it started. Now, we should make it clear that it's not quite a bank, is it?

Not yet. We are going in the correct direction. What we do is we help people get the best rate of interest. We then lend that money to people and businesses who can't borrow from the high street bank through no fault of their own and the profit we give to charity after the overheads are paid.

going through the banking license system. We have got the correct licenses to do everything that I'm doing at the moment, but we are going to become the first new high street bank for over 120 years in Britain. Hang on a minute. What about Metro Bank? Metro Bank was owned by the Americans. So I see it as the first British bank in 120 years. Did you not think about setting up a credit union instead if what you wanted was that community banking?

That's a brilliant question, Felicita. And it's one that I was asked by the Guernsey government last week. I was over there talking to them and advising them how they could open something similar to what I've done here in the UK in Burnley.

And the credit unions are a wonderful thing. But the problem is they have too many restrictions. You're only allowed to lend a very small amount to businesses. You have to have something in common with every single person in the credit union. In other words, you might have to all be... plumbers or all be from a certain place or all be doing something

Together, you cannot lend across the country. And what we do is, like I said, we've lent 34 million right across the UK. So we wouldn't have been allowed to do that with a credit union license. Now, we've been hearing about bank closures and customers choosing to move online. Where's your business with that?

I might end up being the last man standing on the high street, which really concerns me because where are people going to go to do their banking? Where are people going to get cash out? We've got a cash machine there free to use. Where are some of the older people who struggle? with internet banking, where are they going to go? So I'm really concerned about that. But we will be probably the last man standing on the high street.

What you do is still quite niche within that wider banking sector. What do you see as the future of banking? And don't say your organisation. Tell me what you think the landscape will look like. Well, what I'd love to see, there's just over 1,000 large towns and cities in the UK. I'd love to see a community bank run by the community to benefit the community rather than the bonus culture in each one of those towns and cities, all lending 30, 40, 50 million out.

It's not easy, though, is it? Very few people listening are going to go and decide to set up their own version of the Bank of Dave. Well, I mean, I'd love to see a Bank of Physicity or a Bank of Dave or a Bank of Joe. I do not have time, Dave. What are you doing to me? But I'd love to see other people doing the same, run by an entrepreneur in their area where the entrepreneur...

So it's super, super important that we come up with a super safe way. So the entrepreneur has to take the risk. If they're an entrepreneur in each town and city that had skin in the game with his own money, that is how I see it would move forwards. We're 100% capital.

and that's how banks should be. Perhaps what some people might want is the security of a very large bank. But the big organisation did fail and in 12 years we haven't had a single complaint. I think we're a fit and proper people to run it. financial institution and it's so important there's an insurance policy in place that if anything happens to me every single penny is guaranteed and that is what's important you know have six businesses that are on the back of this and they all are there

Well, that was Dave Fishwick, who set up Burnley Savings and Loans, commonly known as the Bank of Dave. Francis, it's a fascinating story. But health warning, we should point out, people need to be careful who they borrow from. What Dave does is very different to perhaps someone offering to lend you some cash down the pub.

Yeah, completely different. I mean, there is a reason why banks are so heavily regulated, why it's actually quite difficult to get a licence as a bank. And I note that Dave actually... Isn't a bank. Not a bank. He's working on it. And working in the right direction, I have to say. I'm sure he will get it eventually. But he said to himself, it is really very difficult to get a deposit-taking licence in particular. And that's because if you're taking somebody's money...

Your job is to keep it safe. And yet, if you are also lending, then you're by definition taking risks. So it's really, really crucial that those risks are very well managed. Otherwise, everybody can really suffer. So it's not a good idea to just... borrow some money from some random lender or

place your money with some random deposit taker either. And out in the wild, in the pub, for example, it can be quite dangerous. You can run into loan sharks and all sorts of things. Victoria, it's quite interesting, isn't it? Dave's talking about wanting to go back to... a lot of smaller scale banks, whereas you were telling me that they all kind of ended up bunching together for security. Yeah, that's right. I mean, it is interesting, though, that historically, the big...

pioneers have always been those that are excluded, in a sense, from the wider banking or financial system. So whether it is a Priscilla Wakefield providing services for women or the Windrush generation. Often you find the future at that local level and then it might be writ large as we go forward in time. Fascinating stuff. Now, I asked at the start of the programme if you think banking is getting easier or harder as it changes.

as it transforms, and there are so many responses. I can't read even a fraction of them, but Ian says, basic stuff is easier as an individual, but my disabled partner finds it harder. Also, I run an arts venue and that's got harder to keep a cash float sorted. Annie says, not exactly difficult, but annoying. I deeply resent being refused at the convenience of a paper statement and having to print one out myself in my own time and at my own time.

expense when the bank doesn't pay interest on my account. Last quick one from Sabina who says, I find banking via an app is a lot easier and secure. I never thought I would ever be tech savvy to manage it, but I have for the last 10 years and I like it. You can check every transaction as it happens. Thank you so much.

Thank you so much for all your messages. Well, that is all we have time for in today's Moneybox Live podcast. But like so many banks, Moneybox Live also has a digital presence. So there's a whole back catalogue of programmes to listen to on BBC Sounds. Many experts today, especially economic historian and author Dr. Victoria Bateman and independent banking analyst Francis Coppola.

Paul Lewis will be back with Moneybox at midday on Saturday. He's going to be talking about teenagers being bombarded with adverts for scams. If you want to email him, me or the team here, then please do. Our branch is open for all your financial stories. The address is moneybox at bbc.co.uk. Do include a phone number if you can. In this podcast, the producers were Sarah Rogers and Kath Patterson. Reporter was Ima Devlin. Production coordinator, Luke Smithhurst. The studio manager was...

Wayne Parks. Our editor is Jess Quayle. I'm Felicity Hanna and this was a BBC News Money and Work production for BBC Sounds. Hello, I'm Kirsty Wark and this is The Reunion. Reflecting on a shared news event, a cultural moment or just the experience of all being there at the same time.

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