UK banks tap the unbanked with basic bank accounts

Up to nine million consumers stand to benefit from the launch by nine major UK banks of fee-free basic accounts.

The accounts will be available to anyone who doesn’t already have a bank account, is ineligible for a standard current account or who can’t use their existing account due to financial difficulty.

The 1 January launch follows last Christmas’ landmark agreement between the government and the banking industry to establish new basic bank accounts that will end bank charges if a direct debit or standing order fails.

The changes will remove the risk that basic bank account customers will be forced into overdraft due the imposition of usurious financial penalties.

Basic bank account customers will now also be offered services on the same terms as other personal current accounts that the banks provide, including access to all the standard over-the-counter services at bank branches and at the Post Office, and access to the entire ATM network.

Economic Secretary Harriett Baldwin says: "Making sure that everyone in Britain has access to basic banking and financial services is at the heart of our long term plan. This is a key step forward in ensuring that our banking industry works for everyone."

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Comments: (4)

Hitesh Thakkar - SME - Fintech startups (APAC and Africa) - India 04 January, 2016, 13:32

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Is UK getting some learning pages from India and African countries on banking for un-banked citizens?

It's good opportunity for ATOM and TANDEM.

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Mike Smith - Orthanc Insight - London 05 January, 2016, 09:30

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And in so doing the government, by making the banks subsidise these accounts, kill off a whole industry trying to serve this sector with fairly priced simple accounts. Ho Hum.

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A Finextra member 05 January, 2016, 09:54

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I have to say I think there's some spin in the 9 million number. There are not 9 million people without some form of current account banking in the UK at present, more like 1-2 million. Many of the 9 million will be people who already have some banking facilities either via PO or Basic Bank accounts. They're certainly getting an uplift in their service and given the support the government (and by extension the taxpayer) has given the banking sector this is long overdue. I think the question is whether it will be funded by cross-subsidy from other customers or from the banks' bottom lines.

Opportunity for ATOM and Tandem? Maybe but most early adopters are more tech savvy and more affluent than the norm, not sure that's the target audience here. Key aspect from the government perspective (other than the charging) is access to branch based service which has been restricted previously for some basic bank account holders.

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Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 05 January, 2016, 14:30

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When I was in UK, I'd two, not one, bank accounts. Both were fee-free. I'd really like to know who are these 9 million people in UK without a bank account and why they don't have one. I thought only India and USA inflated unbanked numbers to serve populist ends Calling B.S On Banking The Unbanked. Looks like UK is catching up.