Despite the claims by the BBA, the pilot was not a complete failure. It demonstrated predictable low take-up in 6 sites and some potential in the other 4 but, more importantly, was a lost opportunity as far as proving the success or failure of the concept of shared banking is concerned.

BASIC PREMISE FLAWED
Inconvenience was related purely to distance, rather than time expended, which forced the scheme to exclude promising urban areas and less remote larger rural communities with multi banked populations.

WRONG MILEAGE BAND CHOSEN
Claimed that ‘Banking Without Branches’ January 2000 had suggested those living 4 miles or less from a branch were significantly less inconvenienced……….. so a 5 mile radius was chosen for the pilot. In fact that research showed an erratic pattern, not related to distance, with a greater percentage claiming difficulty in the 1-1½ mile band than in the >4 mile band. In the 8 case studies, the urban range was from 10%-26% and the rural from 17%-25% averaging 17.6% and 19.6% respectively.

RELATED DISTANCE TO THE BANKS’ LOCATION, NOT THE CUSTOMERS’
Assumed that target population would live/work close to the participating branch; many lived/worked closer/more convenient to a different bank/branch.

WRONG BRANCHES SELECTED
Emphasis on small communities – median population 3000.

9 of the 10 sites were historic geographic monopolies or market dominant positions; especially relevant to market share of branch dependent customers closest to branch thus minimizing pool of potential users. 3 were open substantially less than full banking hours.

Independent assessor prefaced her report “This evaluation can only assess the service that was established – not what might have been if the choice of sites had been different” and concludes “it is not possible, on the basis of this evaluation, to suggest a realistic catchment area for the selection of sites in suburban or inner city areas.”

POTENTIAL OVER ESTIMATED
Measured take-up against a pool of ‘eligibles’ which included non-users of branches and those more convenient to other banking locations.

The BBA’s oft repeated claim to have mailed 70,000 personal and 5000 small business potential users greatly exaggerated the potential. The independent assessor reduced these to a more realistic c 35,000 and c 2500 respectively.

The banks were unable to provide data on true levels of ‘eligibles’ in these small communities but CCBS’s proposition to the independent assessor that branch using customers represented only 30-40% of ‘eligibles’ was not contested.

Against that background the usage figures appear in a much better light but potential in these small rural communities with historic geographic monopolies was always going to be modest.

FAILED TO PUBLICISE LOCALLY
No paid advertising was taken by the banks in local press.

No events for local organizations were held to create awareness.

External publicity on the branches was minimal or non-existent.

ADMINISTRATIVE OBSTACLES
Registration process for businesses, although justified, was not explained, took too long and acceptance was not communicated: for voluntary bodies it was inappropriate.

Transaction limits, personal and business, were unrealistically low.

The £1m p.a. turnover maximum for businesses was too low.

Shortcomings, or perceived shortcomings, existed compared with transactions at ‘own bank’.

The independent assessor acknowledged some of these shortcomings and estimated that personal usage would increase by 25% and small business usage by 75% over time; a conservative estimate.

ONLY ONE FORMAT TESTED
Despite considerable concerns expressed by banks about the lack of neutrality in allowing customers to use a competitor’s branch, a concern shared by some customers, the pilot did not attempt to trial the ‘brand neutral’ shared banking option.

WRONG CONCLUSION
The unilateral conclusion of the banks that shared banking has failed was based on this one flawed scheme and, in particular, on totals and averages across the 10 sites rather than examining individual outcomes for the many indicators to success elsewhere which could be built upon.

In short, much time and energy was expended on this unambitious scheme, which had been discredited at the outset, when investment would have been better directed at a much more comprehensive exercise aimed at finding a workable solution before the current pause in branch closures resumes.

3 September 2003