by Mark Johnston
Alternatives to the high street bank.
It is not surprising that so many consumers at the present time feel fed up with the way they are being treated by their banks. It seems that many are now left wondering not just whether banks in general are too big to fail, but whether they have got too big to manage effectively.
Millions of Royal bank of Scotland (RBS) and Natwest customers were recently stranded without access to their own money thanks to a catastrophic computer meltdown and Barclays was fined £290 million for manipulating interest rates to boost its own profits.
David Bannister, editor of banking technology, stated that “the big banks tend to have systems that were designed in the days when bank branches were shut from mid-afternoon until the next morning and the internet did not exist. They were not built to deal with today’s transactions made 24 hours a day”.
Therefore customers are now starting to run out of patience with Britain’s scandal hit banks.
A YouGov poll just last week showed that around 60% of the general public no longer trusted the big banks.
The British population, who until recently were more likely to get divorced than change their banks, have suddenly begun to get a grip.
Which?, money experts have suggested that there are ways consumers can bypass high street banks and manage their money alternatively.
Internet accounts such as First Direct and Smile, which are owned by HSBC and Co-operative respectively, are a good choice for many at the moment.
These accounts offer pretty much the same range of services and adhere to the same regulations at ‘bricks and mortar’ banks, but they pass the money they save on overheads, like tellers etc. on to their customers. This is usually in the form of higher yields, lower fees and more generous account thresholds.
However the main disadvantage of these accounts is that deposits can only usually be made by mail or by transferring money from another account.
Building societies are also a viable solution to the high street bank. They differ from banks as they do not have shareholders. Overall throughout the financial crisis most building Societies have remained stable.
Building societies tend to place a higher value on customers service and loyalty than high street banks. Banks usually offer their most competitive deals to new customers where as building societies offer their best deals to existing customers.
Brian Murphy, of the mortgage advice bureau, states that “lending from building societies has really spearheaded the increase in mortgage lending this year. This sector in particular has continued to bring competitively priced and innovative products to the market”.
However, for those who still believe that traditional banks are best, smaller banks such as the Charity bank can be a viable alternative.
George Blunden, chairman of the Charity Bank, recently said “people who are disillusioned with the tarnished high street banks should consider the smaller options available to them”.
According to current surveys the contrast in customer satisfaction between the mainstream banks and the alternatives has never been more marked.
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