A new internet bank has been launched by French carmaker Renault just a month after the UK government vowed to turbo-charge competition in the financial sector.
A new internet bank has been launched by French carmaker Renault just a month after the UK government vowed to turbo-charge competition in the financial sector.
But as many new providers prepare to offer digital-only services, campaigners warn that customers are being forced online against their will, with 399 bank branches already closing in the UK this year.
RCI Bank, launched by Renault Group's car finance firm RCI Banque, is the latest entrant to the UK online savings market, offering 1.5 per cent on its Freedom Savings Account for those wishing to access their cash quickly.
Renault could be one of many unlikely names poised to launch into the UK banking sector - with a major foreign retailer rumoured to be the next in July. Prior to the general election, the Conservatives promised to issue 15 new banking licences to help challenge the dominance of the so-called 'big four' - Barclays, Royal Bank of Scotland, Lloyds and HSBC.
The Prudential Regulatory Authority, the body responsible for approving new banks, has allowed eight challengers to open for business since 2010, and previously said it was in talks with 21 separate bodies as part of its mission to ease the banking market's notorious "barriers to entry".
However, many of these newer names have a limited branch network or none at all, preferring to offer their services online. Experts say this could be the shape of things to come, with two more digital banks - Atom and Starling - set to launch this year.
David Webber, managing director of Intelligent Environments, said: "Digital-only banks are in a strong position to cause major disruption to traditional providers. Our research shows that people believe these new providers will offer superior online and mobile services. When taken together with the lower operating and efficiency costs naturally incurred by not having any branches, digital-only banks will be in a very competitive position indeed."
But he went on: "However, digital-only banks do not spell the end for traditional branches, which are still highly valued by a significant proportion of the population, while others have voiced concerns about not being able to speak to someone if they had a problem."
According to separate research from Equifax, a third of banking customers prefer to deal with staff face-to-face, with only 15 per cent happy to visit a website and 8 per cent choosing to email.
However, the Campaign for Community Banking Services has predicted that 1,400 communities will be without a local bank branch by the end of 2015.
Derek French, director of the CCBS, said there had been a "huge leap" in UK closures from 195 in 2013 to 479 last year and potentially 600 in 2015. "We had three banks pledging to keep the last bank in the community open - RBS, Lloyds and Barclays - but they have all abandoned that pledge in the course of 2014. Moreover, the access to banking protocol has effectively said that banks don't really need to listen to communities if they are closing the last branch, so long as they provide 12 weeks notice and engage in post closure provision.
"That basically means doing something with the local Post Office, possibly relocating ATMs and making additional stops on mobile banking services, which is particularly favoured in the Highlands."
Mr French urged banks to experiment with shared branching. "Instead of having four banks not doing very much and all closing in one area, one of those premises can be retained so that it doesn't put too much pressure on the local Post Office."
RBS has announced that at least 99 branches would shut this year, including the last bank in Invergordon. The cull will also take in Brae in Shetland, Stromness in Orkney, Edinburgh's Goldenacre and Tollcross, Greenock, Lochinver and Lybster in the Highlands.
In a statement last month, RBS said: "We are committed to following the UK government protocol on branch closures, and we have made the decision following careful consideration of a wide range of factors including branch usage and the alternative ways our customers can bank with us locally."
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article