Member Article

Regions need more 'entrepreneurial banks'

Entrepreneurial banks are needed to reform the sector and stimulate competition, the founder of Metro Bank and the Financial Secretary to the Treasury have said.

Speaking at IPPR’s The Future of Regional Banks event in Newcastle last week, the pair made calls for changes to the banking sector.

Financial Secretary to the Treasury, Greg Clark told said customers were getting tired of a “computer says no” approach,” and wanted a return to local knowledge and relationships.

Mr Clark said: “In banking a few very large players have come to dominate the market, customers have bridled at what they see as the replacement of local knowledge and relationships with a ‘computer says no’ approach.

“But I – and the Government believe in the importance of ensuring that regional economies across the country have the support and the policy environment they need to grow and thrive. Local bankers should make local lending decisions based on local knowledge.”

The event also heard from Victoria Raffe of the Financial Conduct Authority; Guy Opperman MP for Hexham; Sam Woods of PRA; and Metro Bank founder and former Chairman, Anthony Thomson.

Discussion centred around the recent reduction in capital requirements for new banks, and the shortening of the authorisation process, which has lead to a number of new regional banks being established.

Mr Thomson told the audience: “I believe there is a real opportunity for the creation of new banks that can serve the needs of individuals, communities and businesses; I think we will see between 5 and 15 new banks over the next 3 to 5 years. However, I am unsure that the future lies in regional banks. My belief is that the future lies in banks that are regionally based but, over time, become national in their reach.

“Conversations with local business leaders have convinced me that there is the passion, commitment and resources in the North East to create the first of hopefully many new banks, which will provide more competition, more consumer choice and more credit for SMEs.”

Mr Clark added: “This Government wants to see more banks operating and competing in the UK. More banks challenging the big incumbents. So if communities or entrepreneurs want to set up a bank, either to serve their local community or to compete nationally, and can do this responsibly, Government or regulators shouldn’t get in the way.

“More entrepreneurs are needed to help create more banks and more competition, and we are here to ensure this happens. The current number of banks in the UK is unacceptable, we need more.”

This was posted in Bdaily's Members' News section by Tom Keighley .