Real progress on real local banking

We are gradually getting the rollout of local banking, which I – among many others – have long wished for!

The third one is the South West Mutual covering Cornwall, Devon, Somerset and Dorset.

Digressing slightly, they have an attractive logo incorporating the flags of all the counties. Except that Somerset doesn’t have one, so it is based on their Coat of Arms – and those of Devon and Dorset are both post milennial creations! So it is only Cornwall, with the flag of St Piran, that has some historical basis. But Britain has always been extremely good at inventing its traditions… And this is after all just a local bank…Anyway here it is (click to enlarge) – no £500k consultants involved!

They further state in the wider summary:

The UK has the highest level of regional economic inequality in Europe. Meanwhile, SMEs are discouraged from seeking finance by a lack of trust   in  high street banks, holding back investment in  growth and productivity. In the south west region, SME lending by the large high street banks has fallen by over 5% over the last 4 years. Nationally, over 1.5 million people still lack a current account, incurring high financial and social costs as a result. Branch closures are accelerating, with the region’s market towns particularly at risk, inconveniencing smaller traders and personal customers. But these negative trends can also be seen as market opportunities for a different kind of retail bank.

with which I heartily agree…

It continues – and I’m going to quote a big chunk, because it is blindingly and refreshingly straightforward and gets across the concept.

Remember too, that the current Co-operative bank is not actually a co-operative bank at all:

Purpose, place and participation
The bank will be unique among the increasing numbers of competitors in the market because it is the only bank with all three of the following characteristics.
PURPOSE – we exist to promote more sustainable and widespread prosperity in the region by providing simple, honest and transparent banking services. From the Board to the branch, this is what motivates us. We will be financially profitable in order to serve this purpose.
PLACE – we are dedicated to the region. Our local knowledge is part of our competitive advantage.Because our fortunes are aligned with that of the region, we will try harder than national and global banks to serve its interests. We will be the only truly local bank in the south west.
PARTICIPATION – our customers are more than just customers. They are members and owners, actively involved in making the bank a success. Too often, executives in distant skyscrapers can lose sight of who they serve. Our Board will be accountable to members. With each member having one
vote, regardless of status or wealth, we will be
the only truly co-operative bank in the region. Only 1 in 5 people trust their bank to sell them the best product for their needs, rather than the most profitable for the bank. Our mutual structure and ethical principles are designed to build and maintain
29th November 2018 trust between the bank and its members. Trust works both ways, with members also committing to high standards of honesty and transparency in dealing with the bank and with one another.
Ours is a proven model. From North America to Europe and Asia, regional banks play an important role in inclusive and sustainable growth. They rebalance economic development away from capital cities back to regional economies. They finance SMEs, boosting local employment and enterprise. They tackle financial exclusion and reinvest savings locally. The bank plans to identify, measure and report on its social, environmental and economic impacts in addition to reporting on its financial performance.
The Community Savings Bank Association was established in 2015 to apply this international best practice to creating a network of 18 co-operative regional banks in the UK. The CSBA’s highly experienced board has created the IT, regulatory and operating infrastructure necessary to start a bank.
Supplier agreements are in place for core banking, ATM and payment systems, accounting, regulatory and card services, significantly reducing the risk and investment required to establish a regional bank.

They reckon they will be up and running by 2020, which for a bank is quite quick, but they have the advantage of the RSA and an ex director of what used to be the only surviving ‘Savings Bank’ (in Airdrie) to advise them on the systems.

It is anticipated that significant numbers of local authorities will be shareholders, which, I too, think likely. But it is disappointing that only 7 branches will be staffed – though admittedly this will be by people who, old bank manager style, will be able to take decisions, but I think they will come under pressure from local authority members to increase this, although I understand that in Nationwide fashion, they are going to allow video link conversations with decision makers in the same county – so at least it won’t be miles away in a remote Canary Wharf…

And anyone with a spare £5000? might like to consider:

or indeed contributing to the next local mutual bank when it comes to your local area…

If this New Year has seemed rather full of foreboding, then this engenders some hope for some more meaningful, devolved local control in the future.

We live in hope  – and I understand that the experience in other European countries is that banks with rather more different aims such as those mutuals in Germany or Switzerland, actually force the international banks to be more competitive in areas they may not, now, choose.

The next local mutual bank project seems likely to be in the North East…


[Note added later on 3 Jan 19]

If these ideas are of interest, there are comprehensive details of the earlier established Avon Mutual here.


  1. Chris Bergin -

    I can only hope that some of our more stable and progressive Credit Unions will take the opportunity to
    develop along these lines. The Bank of North Dakota in USA started as a Credit Union in the 1920s
    and was unaffected by the financial disaster of 2008.
    All State banking is done through their own bank which helps to support the local economy and agriculture. Local Banking supporting the local economy and being used and supported by local businesses really does seem to work better than ‘going global’.

  2. Peter May -

    The trouble is in the UK credit unions are not permitted to do banking, so they absolutely cannot really ‘develop’.
    (Knowing this by merging with the Credit Union I think the Bristol pound actually did itself a disservice.)
    But as you say local is best and keeps the profit local and not creamed off into some global banker’s bonus!

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