Basic bank accounts and financial inclusion - 2nd quarter of 2008

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BBA figures show that UK customers have more than 7.4 million 'basic functionality' accounts.

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Re: Basic bank accounts and financial inclusion - 2nd quarter of 2008

• Since Universal Banking began in April 2003, 3.2 million post office accessible accounts have been opened (half for customers with no previous banking relationship, according to BBA research) and 400,000 have been upgraded to other accounts. The second quarter of 2008 saw 144,000 accounts opened net (i.e. accounts opened less accounts closed) and 27,000 existing accounts upgraded.

• Before and since Universal Banking, banks have also offered other basic functionality accounts, accessible through branches, mobile branches and cash machines. There are 3.5 million of these accounts and since April 2003, a net total of 744,900 have been opened and 213,900 upgraded.

David Dooks, BBA statistics director, said:
“Basic bank accounts continue to fulfil their important contribution to financial inclusion. Nearly 50,000 post office-accessible accounts are opened each month, providing important and appropriate banking services for those with particular requirements, such as receiving and making electronic payments or having ready access to their cash, but not wanting an account with credit facilities.”
For further information, please contact:
Press Office (020 7216 8989 )
Out of hours (020 7216 8888 )

Notes to Editors:

1. There are two types of basic banking accounts; those operated through branches and ATMs, and those that can also be operated through post office counters. HM Treasury monitoring of progress towards the shared financial inclusion goal was based on the latter type of account.
2. In total, there are 7.4 million accounts in operation, designed for people who might not meet the banks’ criteria for opening a standard current account or who want to ensure that they cannot overdraw their account. Account features typically include the ability for payments, eg pensions and benefits, to be credited directly to the account, for withdrawals by plastic card through cash machines and the facility to pay bills by direct debit, though they do not offer overdraft facilities nor, for example, a cheque book. The accounts fall between two types:
a. Post-office accessible accounts
Historically, around 750,000 ‘basic-functionality’ bank accounts could be accessed at the post office but, from the launch of universal banking in April 2003, direct payment into bank accounts or Post Office Card Accounts became the normal method of payment for government benefits and tax credits. From that point sixteen banks have offered specific accounts that can be accessed through Post Office counters. Full details of these are published by the Financial Services Authority (FSA) both on their website and in their leaflet “Basic bank accounts - your questions answered”. Monitoring these accounts formed the basis of measuring progress towards the shared financial inclusion goal with HM Treasury of making significant progress towards reducing the number of adults in unbanked households by half, based on a figure of 2.8 million in April 2003. The numbers of accounts opened, net of closures, during each quarter were:

Jan-Mar

Apr-Jun

Jul-Sep

Oct-Dec

2003

111,550

148,044

156,824

2004

153,746

149,449

187,874

184,608

2005

169,249

154,742

149,990

141,989

2006

130,556

127,390

140,202

151,518

2007

164,604

151,534

167,511

152,298

2008

340,948*

143,772

* In 2008 Q1, Halifax opened 197,212 accounts for customers previously holding non-post office accessible accounts; in addition there were 144,117 basic accounts opened elsewhere across the sector. Furthermore from 2008 Q1, net openings include accounts offered by Nationwide Building Society and therefore provide a full picture of new basic account take-up.
Since April 2003, 396,665 accounts have been upgraded to more fully‑featured accounts. Following the first-time inclusion of accounts offered by Nationwide, the total number of post-office accessible accounts now stands at 3.9 million.
Banks offering accounts also accessible through the Post Office are:
Abbey, Alliance & Leicester, Bank of Ireland, Bank of Scotland, Barclays Bank, Clydesdale/Yorkshire Bank, Co-operative Bank, First Trust Bank, Halifax, HSBC Bank, LloydsTSB, Nationwide Building Society, NatWest, Northern Bank, The Royal Bank of Scotland, Ulster Bank.
b. Accounts accessible through branches and ATMs
In the context of ‘social banking’, these accounts were in existence long before the launch of universal banking, with some having been opened in the 1980’s and they operate alongside post‑office accessible accounts. Since April 2003, 213,900 accounts have been upgraded and, although some accounts will typically be closed by banks due to long-term dormancy or inactivity (In line with good practice) or customers migrated to more suitable products, there are 3.5 million of these accounts in existence.
3. Account ‘upgrading’
Basic accounts are regarded as a convenient stepping stone to fuller-featured accounts for people without previous banking relationships. As part of customer relationship management, banks will, when appropriate or on customer request, present options to move from a basic account to other accounts, eg a current account. The term ‘upgrading’ is used in this release to reflect a customer closing a basic account in favour of opening a fuller-featured account with their bank.
4. Data contained in this release may have been re-stated from previous releases as a result of revised or improved data becoming available.


From the BBA site: BBA Association - Basic bank accounts and financial inclusion - 2nd quarter of 2008
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PDF version: http://www.bba.org.uk/content/1/c6/0...ounts_Q208.pdf