Want a loan? Forget banks—there’s a revolution in easy cashby Sam Knight / September 19, 2012 / Leave a comment
© Justin Tallis/reportdigital.co.uk
August 2007. That is when it began, in the unassuming queues outside Northern Rock. Those lines were the first intimation of how the banks would come to fill our minds, would become the symbol and substance of so many things that are wrong.
Half a decade has passed, and what has changed? There was the emergency: the bailouts and the part nationalisation of RBS. But our collective response seems to have been the construction of a logical trap, in which banks have been cast as both sinners and saviours, saboteurs and engineers of the recovery that we still await. They must be more prudent—but they must lend to get the economy going again. They should never have given us all such easy credit—but they must not touch our mortgages.
That contradiction runs through Britain’s relationship with banks. More than 90 per cent of us have a bank account—compared to less than 75 per cent in America—and almost 70 per cent of us own our homes, more willing to take mortgages than our fellow Europeans. In a nation of 60m, we have 71m current accounts, 60m credit cards and an average unsecured debt (on our cards, in our overdrafts) of just over £4,000 each. We leverage. We play the game. We see what we can get.
And yet, as consumers, we are curiously passive. Despite the encouragement of campaigns such as “Move Your Money,” which invokes Gandhi (“Be the change you wish to see in the world”), fewer than 1 in 20 customers swap banks each year, compared to 1 in 3 who swap their car insurance. Instead, we carry out all of our transactions, all our individual hedges and wheezes, in one of the most concentrated, least competitive banking sectors in the world. Between them, the “Big Five”—Barclays, Santander, RBS, Lloyds and HSBC—warehouse 80 per cent of Britain’s current accounts, 66 per cent of our mortgages, 60 per cent of our personal loans and 70 per cent of our business lending. These institutions could not be more familiar, but we definitely don’t like them. Analysis this summer of customer satisfaction of 48 European banks by Forrester, market researchers based in the United States, found Britain’s banks in the bottom five places. What are we waiting for?
Perhaps it is the revolution in lending that is now underway, triggered…