Why banks and building societies are still important

They’ve accounted for most of the bad headlines in recent weeks – but our head of banking, Kevin Mountford explains why banks and building societies still play a vital role in our everyday lives.

As we read newspapers; as we watch the TV; as we look at social media, forums and blogs, it’s clear that over recent months there’s been a real wave of anti-bank sentiment building up.

I guess it’s really understandable – I mean, some of us still blame the banks for the part they would have played in the economic downturn. On top of that we’ve had things like the bank charges issue, the PPI scandal, bank bonuses, and more recently, service-related issues and now the LIBOR manipulation.

So it’s understandable that we’re really fed up. However, we shouldn’t lose sight of the fact that we still need a healthy banking sector. It’s critical in underpinning the economy, and in today’s market in which we operate its nigh-on impossible to actually operate without a bank account.

Why we need a bank account

We can’t lose sight of the fact that in today’s busy world we actually need a bank account just so we can operate our daily lives. Effectively our salaries get paid into the accounts, direct debits get paid out. That makes it far easier for us to budget. It gives us more security – do we really want to be carrying lots of cash around, or even worse, storing it under the mattress?

And on top of that, it helps actually for us to get better deals. Very often with suppliers you pay through direct debits, you generally get cheaper options, and particularly around tariffs on utilities etc. So it is critical that we have a bank account.

There is plenty of choice

There are around 70-80 million personal current accounts in the UK, and around 80% of these are owned by the big four banks. So on one hand, you might say there’s not a great deal of choice. But they do have a plethora of different accounts, of different types that you can choose from. But, more recently, on the back of the anti-bank sentiment, people have been looking at more alternatives.

And even in the mutual sector, or what we know as building societies, we see that there are options with the likes of the Co-operative. And then we’ve got Nationwide, and they’ve got an even bigger percentage. So they are real challengers to the big banks, so there are options and the main thing is that you sit down, understand really what you want from the everyday banking, and choose the product that most suits your needs.

It's easy to switch accounts

It’s fair enough, when we think of switching, that in the past people have been very nervous. There are possible problems, and if they go wrong it can be quite painful. But the world has changed massively. The banks are aware that they needed to improve the process, and it’s a lot easier.

And then next year, we’ve got new regulation that comes in, that’s going to make it even easier to switch, and quicker to switch. So don’t be afraid. If you’re not happy with your current supplier, vote with your feet – there are options out there. You’ve got choice.

If however you still want more information about switching, then click on the link below. You’ll get access to an article which will give you a lot more detail. Good luck.

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