The form of the limited counter reciprocity pilot scheme announced by the banks, after sustained lobbying for piloting of neutral branches, demonstrates that the banking industry has yet to be convinced of the business case for neutral/shared branches.

CCBS considers the case for experimentation to be self-evident: -

• The volume of bank customers in any community with a need or preference to use branches is falling but contains a significant hardcore for which other delivery channels not suitable.
• Individual banks have only c25% market share of this declining footfall - in many communities insufficient to sustain a presence.
• There are major disadvantages in relying on post offices, or the chance that one bank will remain open and offer agency counter facilities, to satisfy these needs.

Only the big banks have the knowledge, expertise, customer base and access to clearing and IT systems to enable experimentation to take place for the neutral multi-bank outlet.

To date CCBS has put the case by means of:-

• Community Bank briefing papers, including references to earlier sources such as Harvard Business Review March/April 1996.
• A cost/income scenario.
• A diagrammatic business case.
• Keynote articles rehearsing the principal benefits to the industry and consumers.
• 'The Case for Community Banking' published by green think tank New Economics Foundation and sponsored by the Federation of Small Businesses October 2000.
• An independent validation study by Loughborough University's Banking Centre March 2001.

Copies are attached or are available on request.

The benefits, to the banks and their customers, of the neutral multi-bank agency concept (Community Banks plc) over and above the reciprocal counter use arrangement are seen to be as follows:

• Customers of other banks can conduct routine transactions in an environment free of perceived or actual pressure to transfer their banking relationship to the host bank.
• Genuine choice of banking provider can be offered in communities unable to sustain more than one bank. In other countries removal of consumer choice at community level has been a bar to regulatory approval of bank mergers.
• The difficult decision of whether or not to keep a banking presence in a community is softened by the availability of an independent social banking provider with whom the ultimate decision would rest.
• Access to external funding support - from charitable, local government, Government and European Union sources - is opened up if the banking outlet is independent, non-profit making and provides access to all banking customers in the community concerned.
• Reduces costs of provision as branch does not have to conform to latest corporate image standards in terms of furnishing, signage, decor, uniforms and also staff terms and conditions of service.
• Because of lower operating costs, and possible presence of external funding support, the sole/remaining bank in a community is offered the ability to sustain 5 day full hours counter service to its own customers against present trend to reduce days/hours of opening to contain costs.
• Franchising becomes a viable option for retailers and others whereas volume of business on offer from one bank alone is insufficient.
• Overcomes the time-consuming task for banks of negotiating lots of individual agency franchise deals with national and/or local providers to service a marginal segment of their business.
• Provides an alternative to relying on the monopoly provider of Consignia (Post Office) as the only staffed banking outlet available to banks to service customers in communities where individually branded branches no longer viable, even if offering counter reciprocity. Banks would have more control over service standards than with Post Office.
• A vehicle to facilitate compliance by the banks with any future legislation, similar to USA's Community Reinvestment Act, that might impose local representation responsibilities on banks as a condition of a banking licence.
• A ready-made framework to slot into Government proposals for retail/service centres in rural communities sharing premises. The Prince of Wales's recent 'Pub as the Hub" rural initiative.
• A low cost vehicle to provide, in justified cases, a banking outlet for new/expanding communities (and areas of financial exclusion) which could not meet the criteria for an individual bank branch.
• A cost-effective means of going back into some of the hundreds of communities where all banks have closed but a case for local banking provision still remains and market opportunities exist.
• Avoids reputational risk and PR damage in branch closure situations.
• Provides local pre-arranged interviewing/"surgery" sales opportunities in a neutral environment.