By Andy Golding, CEO
At the heart of some of the economic difficulties faced since 2008 is the need for banking stability. Governments and markets have pumped billions of pounds into the banks to ensure that people don’t lose confidence in them. Greece is a classic example of what happens when people lose confidence in the banks. There is however good consumer legislation in the UK, such as the Financial Ombudsman Service and the Financial Services Compensation Scheme, which exist to protect consumers and thus increase confidence in financial services
Looking at the other side of that situation though, there are many calls for banking reform. The mainstream banks are going to have to separate their riskier investment banking from their high street retail arms. This should mean less risk to savings but make the banks costlier to run. Who do you think will have to pay for that?
New banks are being encouraged to help shake up the market and bring innovation, competition and more choice. So, shaking up the status quo is a good thing and so is stability. How does that work?
All banks are regulated by the same regulator with the same rules to protect people’s money. But that doesn’t mean they have to be the same. For starters the new banks have a fresh approach and are winning over customers and investors alike. Customer service and good value are at the heart of what they do. The new banks are less encumbered with the old-fashioned infrastructure and costs that come with that. They are more interested in customer satisfaction and not making the mistakes of old.
It’s good that customers have choice. They should use it and decide what is best for them. The new banks will help shake up the old guard and force them to offer better service. So everyone benefits and there is more confidence in banks. That’s what I call win-win.