Building societies could end up replacing banks as the main regional lenders, as trust in banks continues to fall.
According to new research from the ethical bank, Triodos, only a quarter of people are now convinced that their banks care about their best interests. Over a third of respondents said that they no longer trust their bank, while a third said that they were unsure about their banks' motives.
More than half of those who did not trust their bank attributed the recent scandals and the culture of huge bonuses. These issues, they said, showed how out of touch bankers had become.
In the latest twist, the Royal Bank of Scotland, which is 82% owned by the taxpayer, is currently readying itself for the verdict over its role in the Libor rate-rigging scandal. The settlement with regulators could cost the bank up to £300 million, with the first payment due before the end of the year.
Rise of the Building Society
As trust in banks cascades downwards, it could be that building societies replace banks as the main force in regional lending by the end of the decade, suggests KPMG.
The financial services company said that half of the building societies it had analysed (23 of 47), including Leeds, Yorkshire, and the West Bromwich societies, had shown clear signs of rising profits.
The societies’ customer assets have also increased, as disgruntled consumers increasingly turned away from blighted banks and towards institutions that remained clear of the mis-selling scandals.
Banks, for their part, must become ‘simple and boring’ if they are to win back public trust, said Antonio Horta-Osorio, the chief executive of Lloyds Banking Group.
Mr Horta-Osorio said that honest, reliable service had been neglected in favour of aggressive sales targets, and that the public had become sick of "complacent, non-customer focused and inefficient" banks. Lloyds is itself under investigation for the mis-selling of financial products.
"The banking industry has done itself no favours," he said. "To restore trust… retail and commercial banks should be simple and they should be boring."
Which4U currently lists savings products by the Nationwide, and Cambridge and Barnsley societies. If you’re looking to make the same switch today, why not check out our listings?
If you found this article helpful:
- Check out the latest features articles on our Finance Blog.
- Sign up to our free e-newsletter.
- Follow us on Twitter for regular news and product updates.