The ongoing banking crisis is proving to be a hit for ethical banks says Simon Birch.
You may not be aware of it, but there’s a revolution happening down your High Street. When the Move Your Money campaign launched this February with the aim of getting people to change their banks in the wake of the global banking crisis, the organisers could only have hoped that the banking industry would then proceed to unravel in such a spectacular way.
A steady stream of screaming headlines, from the interest rate fixing Libor scandal to the HSBC money laundering for drug barons, has now finally convinced the public that this is an industry which is beyond the control of either the courts or government.
Huge numbers of people are now striking back at the Big Banks where it hurts and moving their money to more ethical alternatives. “There’s been an unprecedented surge in the number of people getting in touch with us saying that they’re about to move or have moved their accounts,” says Louis Brooke from Move Your Money. “People are now moving their money because they no longer trust their bank and want an alternative which has more integrity.”
So who are the winners in this ethical finance revolution? The winnersWell there’s been a surge in the number of new ethical savings accounts. Following the revelations surrounding the Libor scandal, Triodos Bank saw record levels of interest with the number of new customer accounts rocketing by 83%, whilst Charity Bank has witnessed a massive growth of 200% in the first six months of the year compared to last year.
Over at the Ecology Building Society savings account openings for the first half of the year are up 33% and, at the height of the media coverage over Liborgate, web traffic was up 481% year on year.“Dissatisfaction with the high street banks is driving people to take action,” says George Blunden, chairman of Charity Bank. “Ordinary members of the public are beginning to realise that there is an alternative to depositing their savings in commercial banks where they will have no idea what use their money is put to.”
Ethical current accounts are benefiting too with the Nationwide Building Society reporting a whopping 85% week-on-week increase in new account enquiries. Plus in July the Co-op Bank witnessed a 97% increase in customers requesting to switch their current account over to the Co-op.
A significant moment
The current revolution in ethical banking could well prove to be a significant moment for the wider ethical consumer movement. This is because many believe that, because finance is so interconnected with all areas of the economy and life, choosing ethical finance is actually one of the most powerful things that you can do as a consumer.
However, whilst the past decade has seen the mainstreaming of everything from organic carrots to Fairtrade coffee, ethical finance has somehow missed out on the big-time, largely because it’s widely recognised that you’re more likely to get divorced, change job or even move your home than voluntarily take on the burden of changing your bank.
So are we witnessing a historic tipping-point where ethical finance finally becomes mainstream? “What’s happening is an important first step to show that there are alternatives to mainstream banking” cautions Brooke who predicts more banking scandals to emerge over the coming months. “This will lead to sustained growth for the ethical finance sector.”
Rob Harrison, editor of Ethical Consumer, likens the campaign for ethical banking to that of the Barclays Bank boycott of the 1970s and 1980s around its involvement in the apartheid regime in South Africa. “The changes people are demanding of the current banking sector at present are not going to happen quickly,” accepts Harrison. “I think what we’re seeing here is much more like the
South Africa campaign. Fundamental, but ultimately winnable in the long term – even if the goal looks impossible from here.”
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