Crisis, what banking crisis? The rise of ethical banking in Britain
As far as the UK’s ethical banking sector is concerned the steady stream of headlines from the interest-rate fixing Libor scandal to the HSBC money laundering for drug barons has proved to be a marketing campaign from heaven.
Put simply the British public has had enough of the Big Banks which are now seemingly beyond the control of either the courts or government resulting in a boom for the UK’s ethical banks.
“Since January we estimate that half a million people have switched their current accounts to ethical alternatives,” says Louis Brooke from the Move Your Money campaign which launched earlier this year.
“People are now moving their money because they no longer trust their bank and want an alternative which has more integrity.”
If you’ve never heard of an ethical bank before then check out the Ethical Consumer’s Buyers’ Guide to ethical current accounts which tells you everything from what an ethical bank is to how to move your accounts.
So just who are the winners in this ethical finance revolution?
The Co-op Bank and its online banking arm Smile are the only mainstream UK banks that operate a strict ethical policy and have witnessed a 97 per cent increase in customers requesting to switch their current accounts over to the Co-op.
Mutually owned building societies are booming too. The Nationwide for example has recently reported a whopping 85 per cent week-on-week increase in new account enquiries.
Mutuals are considered to be ethical because being mutually owned by their members profits are ploughed back into the business for the good of borrowers and savers rather than shareholders.
Ethical savings accounts are also experiencing spectacular growth.
Triodos Bank which only invests in companies that have social or environmental benefits has seen record levels of interest with the number of new customer accounts rocketing by 83 per cent.
Charity Bank which only lends to charities has also witnessed a massive growth of 200 per cent in the first six months of the year compared to last year.
Over at the Ecology Building Society which only lends on properties that have a clear environmental benefit, savings account openings for the first half of the year are up 33 per cent and at the height of the media coverage over Liborgate web traffic was up 481 per cent year on year.
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 change 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 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.”Tagged in: barclays, Co-op Bank, ethical banking, HSBC, Libor
Latest from Independent journalists on Twitter