Saturday, 29 August 2009

Access must be part of banking equation

Michael Taft: With all the debates over the crucial issues of NAMA, bank recapitalisation, purging impaired assets, etc. – it is sometimes easy to forget that these are instrumental; that we are not repairing broken banks for the sake of it (as if their dereliction constituted an environmental eyesore), but rather in pursuit of the goal of providing credit to the productive sectors of the economy. But there’s another goal that should be equally prioritised; namely, ensuring that all citizens have access to banking services.

TASC has previously highlighted the high levels of financial and banking exclusion. Now we have the findings of the CSO’s Survey of Income and Living Conditions’ Housing Module – showing that huge swathes of the population have difficulties accessing banking services.

More than one-in-five of all households in the state have difficulty accessing banking services. However, this proportion becomes higher in particular categories:

• Rural households: 34 percent
• Single Elderly households: 40 percent
• Lowest 20 percent income groups: 34 percent
• Households Headed by Disabled: 36 percent
• Households Headed by those with primary education only: 32 percent

There are a number of reasons behind the difficulties in accessing banking services: people’s lack of familiarity with financial institutions, literacy levels, personal mobility, etc.

However, many of the reasons are down to the banking institutions themselves: closures of local branches, bureaucratic obstacles to setting up simple accounts, the fact that many banks are not interested in this type of client base.

When the Government announced the bank recapitalisation scheme, it included a clause obliging the banks involved to provide basic bank accounts. That was last December, and little has happened since.

Financial inclusion is an economic and social good. If public resources are being used to repair the banks then the public has some calls to make on banking policy. One of those is that credit become more freely available to businesses and households.

And the other is that banks be required to facilitate access to discriminated groups.

1 comment:

Slí Eile said...

@MIchael Taft Good points. What you are highligting is the social nature of credit as with other public services. Transport, broadband, banking, schools, roads shared in the concept of public goods which cannot be provided by the private sector acting in a completely private capacity. Some measures of mixed economy in provision is necessary. This is why I find the 'temporary nationalisation' line used by some current commentators puzzling. What would be wrong with An Post operating an extended banking service including ATMS's and cheque facilities? - in competition with other retail banks? What would be wrong with a National Recovery Bank operating as ACC and ICC used? Why have it as a temporary measure? Look, once we have nationalised BOI we will hang a huge memorial over the entrance 'Never again. Credit and safe banking for the people!'. Let the private banks in Ireland and elsewhere compete with that! I know where I would put my meagre savings!