Summary
FairBanking produced its first research report entitled “Fair banking: the road to redemption for UK banks” in July 2009.1 Publication followed a year of study, involving in-depth interviews followed by a lengthy internet survey. It concluded that the time is ripe for banks to offer products with features
that are demonstrably improving the financial well-being of their customers.
It is the first time that banking products have been assessed based on financial well-being criteria
The societal benefits of being able to increase financial well-being in the absence of increased wealth or income are significant. In the current climate, it is difficult to envisage banks as a force for good in society. However, the evidence is that if more of the huge resources available to banks were directed towards the well-being of customers, banks could make a difference for a significant part of the UK population. The work of FairBanking provides an opportunity for the industry to focus itself on the well-being of its customers, and to make its profits from the provision of “healthy” products and services. The parallels with the fast-food industry are obvious – and telling. What we are looking for are financial products that are low in salt and fat, and high in nutrition – all served on a sesame seed bun. Savings products, credit cards and current accounts have been rated in this report to give examples of what can be done. Over the next few years there is a tremendous opportunity to use skills in banking to fundamentally change the retail-banking environment – and to change it in ways that will improve the outcome for customers, as well as the image of the banks themselves. Banks can use the FairBanking Ratings to identify features that would improve their products. In addition, new features can be developed that would make a contribution to increasing well-being. It is hoped that, by creating features for one group in society, availability will spread to those with most difficulty managing their money.
To pursue the path towards a goal of greater well-being for bank customers may appear to be idealistic. And indeed the Financial Times accused the first report of being “born of idealism”2. However, the evidence is that the product features described in the rating system require willpower, on the part of providers, rather than any significant commitment of capital. There are enough examples contained in this report to show that improving financial well-being does not undermine the profitability of the bank. Indeed it is highly likely that the benefits of having loyal, satisfied customers will make this approach a successful strategy. The test is to convince retail bankers in the UK to embrace an approach that will create well-being for their customers and long-term value for themselves.
1 “Fair banking: the road to redemption for UK banks (Centre for the Study of Financial Innovation, July 2009)
2 “White paper over the cracks”, Matthew Vincent (FT:10th July 2009)
