When they’re not busy fixing their latest systems failure, the techies at our high street banks love finding new ways for us to spend our money without having to hold actual cash.
Contactless payment cards are their latest obsession, while they’re keen on smartphone apps too.
It’s impressive from an innovation perspective and no doubt makes life easier for some customers. Yet you have to question the time and money being spent on developments for which there is very little customer demand. Do you know anyone who makes payments through banking apps, or has decided that they want be able to?
That’s a naive way of looking at it, obviously – if banks delivered what their customers really wanted (ie good service and competitive, simple products) they’d be held in far greater esteem than they are now.
If you were particularly sceptical about their intentions, you might view the inception of contactless cards and their like as a banking plot to wean us off free cash machines. We don’t like paying for cash withdrawals. Just two-thirds of cash machines are free to use, yet 97 per cent of withdrawals were made free of charge, according to research by Citizens Advice, underlining our distaste for ATM charges.
More than half the cash withdrawn in 2011 was from Link machines, which allow us to take out money from ATMs other than those provided by our own bank or building society.
So we take it for granted. But some banks have already imposed restrictions. Both Lloyds Banking Group and Royal Bank of Scotland have curtailed access to the Link network for basic bank account customers.
Just as the EU pushes for all people to have access to a bank account regardless of their financial history or circumstances, the very banks that we prop up have taken the opposite tack.
A government taskforce said in 2010 that banks should “widen access and improve features” of their basic bank accounts. Instead, the banks bailed out by the taxpayer have done the opposite. They made their move a while ago – RBS late last year and Lloyds some time before that – and it’s fortunate that other banks have yet to follow suit. They may still do so, however, and that’s why action is needed.
Basic bank accounts aren’t profitable. As time goes on and the end of free current accounts nears it’s increasingly inevitable that other banks will restrict access to basic banking.
But basic bank accounts are essential. Without a bank account those on the lowest incomes end up paying the most for energy, credit, insurance and other financial services, or being excluded from them entirely. Employment is pushed further out of reach too, with no account to pay into.
Wrong-headed austerity measures are putting low income households under growing financial pressure. Now is the time for the government and the regulator to push for wider access to banking and remind the taxpayer-backed banks of their social and moral responsibilities.
A FULL five years after the credit crunch began and with no housing market resurgence in sight, homeowners continue to cling on to a forlorn hope that house prices are going to bounce back.
There’s certainly little chance of house prices rebounding by 15 per cent, which according to S1 Homes is the average “reality gap” between asking and selling prices in Scotland.
There are myriad reasons why the housing market is struggling, including low consumer confidence and a shortage of affordable finance for first-time buyers.
But the market is also hamstrung by the continued reluctance of sellers to reflect market conditions in their pricing.
The Royal Institution of Chartered Surveyors has warned that homeowners seeking a quick sale must be more realistic in their expectations. More people are looking to buy, according to Rics, yet they are up against sellers who seem to believe their home should be valued in line with the pre-crunch market.
Sellers who are also buying seem to forget that if it takes a 10 per cent asking price reduction to sell their home, they can benefit from the same adjustment when they buy.
Will house prices be higher this time next year? Almost certainly not. Will they recover to the levels of before 2007, which were inflated and unrealistic? No they won’t, not in the next five to ten years. If you’re holding off waiting for prices to rise substantially, you face a long wait.