18th June 2015

BBA Brief – 18 June 2015

Customers able to access banking services in more ways than ever before

Mobile and internet banking, alongside banking services offered through the Post Office, means that banks customers are “better served than ever before”, according to research published by the BBA. The Telegraph (B4) notes that 99.9% of customers live within a 20-minute drive of a bank branch or Post Office. The article quotes BBA Chief Executive Anthony Browne, saying:

“It is now easier than ever for people to do their banking. You can check your balance, pay back a friend digitally or speak to your bank for advice 24/7.  That means we are all in touch with our banks now more than ever before. But technology is not for everyone which is why all the major banks have done deals to allow you to do basic banking through Post Office branches. That means there are now more places where you can bank than ever before.”

Read the BBA’s full press release here.

Ahead of today’s BBA Retail Banking Conference, Mr Browne appeared on 5live’s Wake Up to Money (36:00) and Radio 4’s Today programme (19:00) to discuss the widening access to banking services and digital banking. He noted that banking is going through a “digital revolution”, and that mobile and internet banking is “driven by customer demand, it’s what customers want”. However, he added that the bank branch is not dead, with a number of banks upgrading their branches and expanding their branch network.

Bank stress tests criticised

An Adam Smith Institute report has called for the Bank of England’s stress tests to be scrapped, describing them as “fatally flawed”, writes the FT (£, p2). The report, written by Durham University’s Professor Kevin Dowd, argues that the tests are “worse than useless” as the Bank set the bar “too low for minimum capital requirements and left itself open to banks manipulating their risk-weighting models”. The report notes that the tests “failed to apply a minimum ratio of capital to leverage”, and that they are “sleep-walking” the banking sector into another financial crisis (CityAM, p10). In response, the Bank declined to comment but pointed to evidence given by BoE official Alex Brazier to the Treasury Select Committee, in which he described the programme of tests as “really tough” and “a big step forward for macroprudential policy”.

Fed set to raise rates

The US Federal Reserve has signalled a possible rise in interest rates as soon as September, reports the FT (£, p1). The committee expressed “cautious optimism” for the US economy, but indicated that the pace of tightening would be slow. 15 of the 17 officials at the central bank expected a rate rise by the end of the year, however the committee appear to be “heavily divided” as to whether there would be one or two increases in interest rates in 2015. The Times (£, p39) notes that the Fed lowered expected rates at the end of 2016 to 1.625% from 1.875%, and at the end of 2017 to 2.875% from 3.125%.

Today’s diary

BBA: Retail Banking Conference 2015

House of Commons: European Union Referendum Bill – Committee of the Whole House

Eurogroup

Latest from the BBA

BBA EU Policy Advisor Claudia Trauffler talks to Graham Bishop about Brexit, Grexit, & PSD2 after the 111th Brussels for Breakfast.

Latest from our sponsor – Jaywing

Content marketing is no longer just a corporate buzzword – it’s become an imperative thanks to its proven effectiveness. But how can financial brands use it to educate customers about the importance of planning for their financial future? Read our latest blog post here to find out.

Stat of the day

2.1 billion – the number of times UK customers interacted with their current account in 2015, an increase of nearly 50% since 2010 (BBA/CACI research)

In brief

The Bank of England’s David Rule has said that securitisation could “make the financial system safer by giving banks more sources of funding” (Telegraph, B4).

The Greek central bank has urged its national politicians to sign an agreement with its creditors or risk an “uncontrollable crisis”, reports the FT (£, p1). The Telegraph (B1) states that the Greek government has admitted to the International Monetary Fund that it currently does not have the funds to make this month’s repayment.

Midsized banks in the US have this year for the first time taken part in a stress test exercise – a requirement of the Dodd-Frank Act 2010.

The FT (£, p19) writes that the Financial Stability Board’s efforts to label the largest asset managers as “systemically important” have taken a hit, after Iosco leaders stated that they thought it was “more important to focus on understanding the risk posed by the sector as a whole than to worry about specific large firms.”

A report by the OECD suggests that countries with bigger banking sectors suffer “weaker growth and worse inequality” (Guardian, p27).

Former Shadow Chancellor Ed Balls will return to Harvard University to take up a year-long academic role researching financial stability (Times, £, p11).

What the commentators say

The Independent’s James Moore (p56) writes that although the Bank of England’s stress tests have their flaws, they are “probably the best we can hope for, so long may they continue”.

In the FT (£, p11), John Gapper argues that the peer-to-peer lending market is changing as institutional lenders begin to enter the market alongside individuals.

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