1m basic bank account milestone reached
There are two types of basic banking accounts; those operated through branches and ATMs, and those that can also be operated through post office counters. HM Treasury monitoring of progress towards the shared financial inclusion goal is based on the latter type of account.
The number of basic bank accounts opened since April 2003 for people who were previously unbanked has reached one million according to new data released by the British Bankers Association today (Oct 5).
The second quarter of this year saw a net total (accounts opened less accounts closed) of 127,390 post office-accessible accounts opened and 36,541 existing accounts upgraded to fuller featured accounts. Since the launch of Universal Banking in April 2003, a net total of 1.97 million post office-accessible accounts have been opened and 171,571 of these upgraded. Based on BBA research (please see link below) which shows that 51% of customers who open a Basic Bank Account were previously unbanked, a net total of in excess of one million Basic Bank Accounts have been opened by previously unbanked customers.
Banks were offering basic accounts accessible through branches, mobile branches and ATMs well before the advent of Universal Banking. A net total of 641,857 such accounts have been opened and 174,868 upgraded since April 2003, with the total number of these accounts currently standing at nearly 4 million.
Ian Mullen, chief executive of the BBA, said:
"We have now passed the one million accounts milestone in our commitment to the shared goal of making significant progress towards halving the number of adults in households without a bank account by November 2006. We shall now build on this achievement in our continuing work to promote financial inclusion."
Notes to Editors
Historically, around 750,000 'basic-functionality' bank accounts could be accessed at the post office but, from the launch of universal banking in April 2003, direct payment into bank accounts or Post Office Card Accounts became the normal method of payment for government benefits and tax credits. From that point sixteen banks have offered specific accounts that can be accessed through Post Office counters. Full details of these are published by the Financial Services Authority (FSA) both on their website and in their leaflet "Basic bank accounts - your questions answered" (please see link below). Monitoring these accounts forms the basis of measuring progress towards the shared financial inclusion goal with HM Treasury of making significant progress towards reducing the number of adults in unbanked households by half by November 2006, based on the figure of 2.8 million in April 2003. The numbers of accounts opened, net of closures, during each quarter were:
Since April 2003, 171,571 accounts have been upgraded to more fully featured accounts. The total number of post-office accessible accounts stands at 2,544,254.
Banks offering accounts accessible through the Post Office are:
Abbey, Alliance & Leicester, Bank of Ireland, Bank of Scotland, Barclays Bank, Clydesdale Bank, Co-operative Bank, First Trust Bank, Halifax, HSBC Bank, LloydsTSB, NatWest Bank, Northern Bank, The Royal Bank of Scotland, Ulster Bank and Yorkshire Bank.
In the context of 'social banking', these accounts were in existence long before the launch of universal banking, with some having been opened in the 1980's and they operate alongside post office accessible accounts. Since April 2003, 174,868 accounts have been upgraded and, although some accounts will typically be closed by banks due to long-term dormancy or inactivity (In line with good practice), there are 3,970,738 of these accounts in existence.
Basic accounts are regarded as a convenient stepping stone to fuller-featured accounts for people without previous banking relationships. As part of customer relationship management, banks will, when appropriate or on customer request,, present options to move from a basic account to other accounts, eg a current account. The term upgrading is used in this release to reflect a customer closing a basic account in favour of opening a fuller-featured account with their bank.
Understanding Consumer Experience When Opening and Using Basic Bank Accounts (Internal Link)
FSA - Basic bank accounts - your questions answered (External Link)