Go back far enough and banking used to be about trust. We trusted our banks because we could walk into our local branch, know the bank manager, and had confidence that the staff were working in our interests and the interests of our local community.
Sadly, over time, big banks have lost that connection with the communities they serve. Currently there are just over 40% of the number of local branches there were thirty years ago, and the few surviving branches are little more than glorified shop fronts for opaque, centrally determined, computerised assessments all too often producing the “computer says no” phenomenon. We no longer understand the decisions that banks make having been let down with poor decisions in the past, with banks partaking in riskier investments distant from the needs of society, and excessive bonuses for staff at the very top.
The result? Today, barely a third of us trust our banks to work in our best interests. High streets are either failing, or are being increasingly homogenised with identical line-ups of multinationals with less than exemplary tax records, while small businesses are squeezed out. Moreover, a significant minority of people are being increasingly left behind by the industry’s push to digital and impersonal banking.
Of course, it doesn’t have to be this way. At Greater London Mutual, we’re starting a different type of bank; a bank that is connected to its communities, responsive to peoples’ needs, and responsible with your money. One of a number of pioneering banks that are owned by, run for, and accountable to its customers, Greater London Mutual promises to radically transform the banking landscape in London by going back to basics and aligning the incentives of the bank with the needs of society and of its customers.
Whilst many banks make similar such statements, none can claim to be truly accountable to their customers, nor fully democratic either. As the UK’s first bank operating a truly co-operative model, GLM can be trusted to walk the walk as well as talk the talk because it’s our members that control the bank. Through our one-member-one-vote structure, everyone has a say – not just rich investors or pension funds.
Run by professional management, GLM will be a profit-making institution that reinvests its surpluses back into its membership, rather than a profit-maximising institution that extracts wealth from communities. It’s a truly different proposition from a truly different kind of bank and one that promises enhanced financial inclusion, social impact, and improved outcomes for small and micro businesses thanks to our commitment to deliver community benefit banking.
The road to achieving our vision is long and difficult, but no one ever said building a bank would be easy. In fact, when we started this journey two years ago many people said it couldn’t be done, but through collaborative innovation, sheer determination, and a lot of hard work we’re now getting to the final stages of our preparatory phase and are on course to open our doors in late 2019.
There’s still a long way to go, with a wealth of activity and institution building to come between now and then. At GLM we are now growing and developing our business, and designing a bank that works for you. So, what better way to build for our communities and ensure alignment with our members, than to invite you into the process from the beginning?
To serve this aim, GLM is partnering with the RSA to host a participatory webinar to share our progress, and to explore the opportunities for Fellows to get involved in helping us to build community benefit banking in London. We hope that you will join us, and look forward to welcoming your involvement in the movement to build a better kind of bank.
Gemma Bone Dodds FRSA
Dr Gemma Bone Dodds FRSA sets out why we urgently need to transform the banking system and create a truly local bank for the people and businesses of the North East.
Chief Finance Officer at the London Borough of Brent, Conrad Hall, discusses the value of local banks in tackling financial exclusion and supporting disadvantages communities.
Derek Mills on the development of a new community bank for Wales as part of a wider movement by the RSA Transform-supported Community Savings Bank Association.