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Banking the unbanked -
a snapshot
November 2005
Banking the unbanked - a snapshot; Toynbee Hall SAFE, November 2005
1 Contents
List of figures 3
Acknowledgments 5
Foreword 7
Summary of recommendations 9
Preface 11
1. Introduction 13
2. Methodology 17
3. About the people 24
4. The Informed Choice Discussion 26
5. Marketing 30
6. About the product 33
7. Application process 36
Visiting financial institutions
Implementing identification and address verification guidelines
8. Accounts opened 48
9. Possible next steps and conclusion 52
Appendix A
Project Worker Survey 55
List of Figures
Fig 1: Flow chart describing interaction with client and points 17
of data collection
Fig 2: Account ownership at first contact meeting 24
Fig 3: Age of clients 25
Fig 4: Clients by type of benefit received 25
Fig 5: Stated preference for Direct Payment 27
Fig 6: Stated preference for Direct Payment by age 27
Fig 7: Stated preference for Direct Payment by benefit received 28
Fig 8: Rating of different banks’ marketing materials 31
Fig 9: Basic bank account product features 34
Fig 10: Amalgamated ratings across all banks, all visits and 40
all purposes
Fig 11: Ratings for those visits where the purpose of the visit was 40
to open an account
Fig 12: Ratings for the occasions on which the purpose of account 41
opening was realised and an account was opened
Fig 13: Ratings for the occasions on which no decision on the 41
application was reached, and a decision was still pending
Fig 14: Ratings for the occasions on which the application was 41
Fig 15: Stated barrier to not previously opening an account for 44
Direct Payment
Fig 16: Ratings for those visits where the purpose of the visit was to 45
open an account (as opposed to information gathering or
account follow-up)
Fig 17: Ratings for the occasions on which the purpose of account 45
opening was realised and an account was opened
Fig 18: Ratings for the occasions on which no decision on the 45
application was reached, and a decision was still pending
Fig 19: Ratings for the occasions on which the application was 45
Fig 20: Ratings comparing the utilisation of the lists by staff, 46
compared with the outcome of the account application
being opened
Fig 21: Stated preference for Direct Payment shown by overall 49
figures and by 1035 cases where SAFE knows an
account for Direct Payment was opened
Fig 22: Accounts opened for Direct Payment 49
Fig 23: Accounts opened by brand where known 50
Banking the unbanked - a snapshot
By Adam Clark and Alexandra Forter, with Faith Reynolds
A snapshot on the institutional barriers to banking for people experiencing
financial exclusion by SAFE, part of Toynbee Hall
This snapshot is an additional outcome of the Access Project. The authors
would like to thank SAFE Project Workers Alex Laver, Ana Miah, Ella Titman,
Lucy Thomson, Mark Allan, Milla Gregor, Nevres Niyazi, Naomi James, Ola
Aishida and Peter Hamerton.
The authors would also like to extend their thanks to their Toynbee Hall
colleagues, Alice Brennan, Alice Rogers, Ian McGimpsey and Luke
Geoghegan, as well as Andy Chaplin and Gail Biggerstaff at change, and Nick
Jepps at Impact Housing.
November 2005
“The Government recognises that financial exclusion imposes real costs on
those who can least afford them and is committed to working to address this
problem. Access to banking is key to promoting financial inclusion as it
enables families to benefit from the savings associated with being able to
cash a cheque for free and with being able to pay bills by direct debit. A bank
account can also act as a key to further engagement with financial services.
In recognition of this the Government and the banks have agreed to work
together to halve the number of adults in households with no access to a bank
account and to have made significant progress in two years. The work of
organisations like SAFE is important in improving access to banking amongst
individuals who face particular hurdles. I have taken a particular interest in
the work SAFE has done in parts of London where financial exclusion
presents a real challenge and the problems faced are very acute. Lessons
learned by SAFE in undertaking this work represent a valuable practical
contribution to tackling financial exclusion.”
Ivan Lewis MP
Summary of recommendations
Free, independent and accessible services, such as those provided
by SAFE, should be more widely established to facilitate access to
banking for vulnerable consumers or people on low incomes.
A certification for marketing material should be created by an
independent regulator.
Research should be undertaken to consider ways in which innovation
in product design can facilitate financial inclusion, serve client needs
and remain commercially viable.
The basic bank account product should be designed with the needs
of the target group at its core to prevent discrimination and
‘exclusion within inclusion’.
The financial services industry, Government and others should invest
in support for newly banked people.
To increase the likelihood of full and consistent compliance with the
Banking Code the Banking Code Standards Board should publish the
findings of its mystery shopping exercises.
The financial services industry should empower its customers to
enable them to know when banks’ behaviour is unacceptable and to
be able to challenge this when it happens.
The financial services industry should take full responsibility for
enabling and incentivising its staff to sell its products and provide a
good level of service to all, no matter what their background.
Clear, transparent and comprehensive guidelines on acceptable
documentation for account opening purposes should be published in
each branch and made available to customers.
All frontline branch staff should receive regular comprehensive
training on procedures for account opening and how these can be
adapted for people without traditional documentation for
identification verification.
Applications for basic bank accounts should always allow at least the
option for identification verification at branch level but preferably full
account opening at branch level.
The British Bankers’ Association Financial Inclusion Advisory Panel
should undertake to produce and publish guidelines for branch staff
on how people experiencing financial exclusion can best be served in
relation to account opening.
Most of society takes for granted the existence of 'tools' for managing, saving
and investing money. Indeed, it is difficult to imagine what our financial
strategies would be like if there were no bank accounts, pension plans or
insurance cover available. But this is the reality today in the UK for many
people who cannot gain access to even the most basic products. For others,
previous negative experiences and/or lack of financial literacy effectively
exclude them. The financial services 'revolution' has passed them by. Coming
on top of existing deprivation and disadvantage, financial exclusion can be the
difference between a household staying in control or spiralling into decline.
Even for those families and individuals who are coping at the moment, it may
take very little for that situation to deteriorate.
SAFE (Services Against Financial Exclusion), part of Toynbee Hall, promotes
financial inclusion among disadvantaged groups of people by working to
increase financial capability and access to financial products. SAFE carries
Toynbee Hall’s strapline at its heart – learning from local action, developing
national solutions.
Since 2002 SAFE has developed a range of practical services primarily
serving the local community of Tower Hamlets, but now more widely serving
London. Alongside its practical work SAFE has always sought to use its own
experience to benefit that of others working in the field, either informally
through meeting and sharing best practice with others or more formally
through developing resources like the Personal Finance Handbook,
developed in partnership with Child Poverty Action Group. Most recently
SAFE launched FIF, the national Financial Inclusion Forum. FIF provides a
space for organisations, associations, policy makers, financial institutions and
funders across the UK to come together, share ideas and build a network to
increase the awareness of the crucial role financial inclusion plays in wider
social inclusion.
It is in this vein of sharing its experience that SAFE presents this snapshot
detailing its experience of working among especially vulnerable groups of
people to help them access mainstream banking services for everyday money
management. This report was an additional outcome of a project whose
primary aim was to help people transition to Direct Payment. SAFE Project
Workers worked at a grass roots level with customers and financial institutions
on a daily basis but have always remained aware of how their local work fitted
into the ‘bigger picture’ of promoting financial inclusion at a national level. It is
due to the additional effort and committed nature of SAFE Project Workers
that SAFE can share its findings and ultimately hope to increase financial
It is hoped that this snapshot will provide a useful insight into the reality of
accessing mainstream financial services for people on low incomes and spur
on industry, Government and the voluntary sector to pursue true financial
inclusion for the benefit of all society.
This report provides a snapshot of how people experiencing financial
exclusion are accessing financial services and how the industry is facilitating
that. The data is based on:
· a database of 2400 client records;
· 83 surveys completed by SAFE project workers during April – June
2005 recording their experiences of single interactions with bank
branches; and,
· a focus group made up of SAFE Project Workers.
The work is focused on institutional barriers rather than the basic bank
account product itself. (Recommendations on product development have
been made by the National Consumer Council and SAFE endorses the nature
of this work.)
The focus of SAFE’s work was to deliver a service to its clients and not to
undertake research which could be rigorously analysed. However, it is hoped
that this report which details and gives some evidence to SAFE’s experiences
of working with hard to reach groups will inform the debate on access to
banking for low income groups of people and provide constructive feedback to
the financial services industry on areas where they can improve their service.
Financial exclusion
Financial exclusion can be described as the circumstances in which a person
does not have access to appropriate financial products or services which give
them the opportunity, ability and confidence to make informed decisions about
their financial situation or organise their money effectively1.
Experience of financial exclusion is concentrated among people on low
incomes living in disadvantaged areas2. Product holding alone does not imply
full financial inclusion. For instance, simply owning a basic bank account
does not imply that a customer has left the cash economy as they may just
empty the account as soon as they receive their benefits or wages. However,
account holding is widely recognised as a common indicator of the degree of
financial inclusion across a society. Indeed, the government and financial
institutions have established this measurement as their goal: to halve the
number of adults in households without a bank account, and of having made
significant progress in that direction within two years3.
In the United Kingdom, most recent statistics available demonstrate that bank
accounts are not equitably distributed among the population. The 2002/2003
Family Resources Survey4 shows that 1.9 million households are without any
1 Beyond Bank Accounts, IPPR/CAB, 2003
2 See In or Out, FSA, July 2000 for more information about financial exclusion and who it effects
3 Stated Terms of Reference for the Financial Inclusion Taskforce: visit www.financialinclusiontaskforce.
4 Given the Government’s recent drive to increase transition to Direct Payment the number of people
with bank accounts is likely to have risen. However, more recent data is not yet available to give us a
clear indication of how the take-up of bank accounts has changed over the last two years
kind of account. This equates to 8% of the total population but, among those
households in the bottom three income deciles, this percentage rises to 65%5.
For those without transactional accounts:
· Money management is more expensive. For instance, without an
account it is not possible to take advantage of direct debits which offer
discounts on bills and cheques may have to be cashed at significant
· Entrance into employment is more difficult because increasingly
employers wish to pay wages directly into an account.
· Opportunities to secure and save money are few. Saving cash in a
jam jar or under the bed leaves individuals vulnerable to theft.
· Opportunities to borrow are limited. Bank accounts often act as a
gateway to other financial products. Without a bank account
individuals are forced to rely on alternative, sometimes illegal, and
usually expensive forms of credit.
Policies and products
Financial services are becoming increasingly sophisticated as technological
advances make allowances for increased cost and time efficiencies and thus
increased competition among financial services providers. Alongside market
forces Government itself also has a vested interest in seeing people take
greater personal responsibility for their financial future as it too can make
savings in the way it administers and funds the welfare benefits system. For
example, the state pension will become ever more costly with an ever
increasing elderly population. Encouraging people to save for their own long
term security relieves some of the cost burden and encourages personal
financial responsibility. Government also has goals to reduce social exclusion
and poverty. In 1999 Policy Action Team 14 published their report Access to
Financial Services. This showed how financial exclusion effected people on
low incomes and how better access to more appropriate financial products
could increase social inclusion.
Since PAT 14 and the recognition of wider economic interests the financial
inclusion agenda has seen increasing momentum. Government policies have
obliged the financial services industry to respond by providing simplified
products to meet the perceived target groups’ needs. The development of
Individual Savings Accounts, Stakeholder pensions, the Child Trust Fund and
the Basic Bank Account (and associated Post Office card account) have all
been paid for largely by the financial services industry. The extent to which
Government has achieved its aims through these products varies, as does the
extent to which the financial services industry has backed the policies which
underlie their own product development.
Direct Payment
A case in point is the automated transfer of welfare benefits, known as Direct
Payment. The original concept was to allow people a no-frills banking service
5 Family Resources Survey, 2002/2003
through the Post Office. Known as the Universal Banking initiative, it was
largely driven by the fact that automated transfer of benefits would reduce the
costs of administration and the level of fraud, while at the same time revitalise
the Post Office and increase financial inclusion. The costs proved too high for
both Government and the financial services industry who compromised on the
development of Post Office card accounts and basic bank accounts.
The Post Office card account works effectively like an electronic benefits
book: people may withdraw their benefits from the account, a little at a time if
they choose, but no money can be deposited and there are no transactional
facilities. Basic bank accounts were developed so that people could access
their benefits through the Post Office6 and have access to basic transactional
banking facilities. As well as investing in the development of its own products,
at the Government’s suggestion, the financial services industry also paid
£180million over five years towards the Post Office card account.
However, despite banks and building societies investing in their basic banking
products specifically for this market there is no great appetite to sell the
product. This is largely because the product itself and the low-income target
group are not considered particularly profitable. The consequence of this is
that people get caught between a policy requiring them to open an account to
make a transition to Direct Payment on the one hand, and the high street
bank branch whose aims do not traditionally include serving less profitable
groups of people. At the sharp end, this means people experiencing
financially exclusion are still not always able to access bank accounts.
Bridging the gap
SAFE, part of Toynbee Hall, aims to act as a bridge between Government and
industry, by providing support and advice to individuals, to help them
understand the options available to them and to help them action their choice.
To this end, SAFE has worked over the last three years to help people access
appropriate accounts for everyday money management and it continues to do
this work. However, between October 2004 and August 2005 SAFE
expanded this service pan-London to support the Department for Work and
Pensions in its drive to increase the take-up of Direct Payment within some of
the most vulnerable and hardest to reach groups.
During the course of SAFE’s work it undertook informed choice discussions
with people on very low incomes from typically hard-to-reach groups to help
them understand Direct Payment and the options for receiving their benefits
(including opening a Post Office card account or a current or basic bank
account). Appropriate to their decision, SAFE discussed different types of
basic bank accounts available using comparative information, encouraging
the individual to make their own informed decision. SAFE then helped its
clients to access an account by helping them prepare their identification, fill
out application forms and accompany clients to banks as appropriate. SAFE
continued to offer follow-up support to the client to ensure an account was
6 All basic bank accounts have this feature. However, some have been developed to allow their
customers the possibility of depositing money through the Post Office into a known bank account as
opened and the client was happy in using the account. SAFE provided
additional financial capability training as appropriate.
Alongside the practical service SAFE provided to clients it also provided
training on this particular area of work and broader financial inclusion
messages to over 150 partner organisations across London. It provided
additional resources including a guide to opening accounts for people on low
incomes and a guide on how to obtain sources of identification and address
Fig. 1: Flow chart describing interaction with client and points of data
The data for this snapshot was taken from the main management information
system of SAFE’s Access Project, with some additional input from its project
workers in the form of surveys and focus groups. This section deals with the
methodology for data collection and processing specific to each chapter. First,
some general points.
Informed Choice
Discussion with client
Client details recorded
Client selects option for
Direct Payment
Client carries forward
choice without support
Further support to get an
appropriate product
Direct payment
inappropriate for client
SAFE records more data
on client needs
Client selects preferred
product with information and
support from SAFE
Client gets account and
Direct Payment starts
SAFE accompanies client
to bank
Possible survey of
experience completed
SAFE attempts follow up SAFE provides support
around alternatives
SAFE worker records
SAFE worker records &
shares experience
Overall 2437 people were seen by the project. However, their situations
varied, needs and choices with regards financial products varied, and
consequently SAFE’s interactions with them did too. Notably, while all clients
engaged in an Informed Choice Discussion, or ICD, (see section below), there
was only concrete information about the transition to Direct Payment in
around 1000 cases. Of those, information about the specific account that they
chose is limited to around 800 accounts.
Data was collected with the needs of these clients and the targets of the
project uppermost in mind. It was not usually collected for research purposes.
So, while collection procedures were clearly explained to all data collectors
and reviewed for consistency and reliability there is introduced some bias and
inconsistency into recording data.
One example of this is that more information was gained where more support
was required by a client. So the data and surveys tend to reflect the needs of
the most vulnerable groups of people SAFE works with, and are not as
focussed on the experience of financially excluded groups with lower support
needs. That said, when looking at issues like experience of service in bank
branches, it should also been taken into account that an experienced advisor
from SAFE with high levels of knowledge about products and account opening
procedure was present.
Due to the client focus of SAFE’s work, the number of surveys is skewed to
the bank branches where clients wanted to open accounts or felt they would
be more likely to succeed in account opening. SAFE Project Workers filled
out 83 surveys on branch visits covering 10 bank brands over a six month
period between March and August 2005. However, a consistent amount of
data is not available across all bank brands and as such SAFE can only
provide generic information regarding bank performance in this report.
Nor is it possible to understand how geographic proximity of different
branches interacted with account opening. We simply cannot tell if, for
instance, a customer opened an account with one bank rather than another
purely because another bank branch was not available in their location.
Where data recorded is about products or institutions providing products, the
work covers those institutions providing basic product to a lowincome/
financially excluded market. This information was largely recorded by
surveying project workers.
This is a genuine snapshot, and as such is unable to take account of
potentially important changes that took place during the period of data
collection. For example, there is no attempt to make comparisons pre and
post changes to the Banking Code, or to take account of changes a bank has
made to its product or internal processes.
Informed Choice Discussions (ICD)
The ICD tended to act as a first point of contact for the client. At the end of
the initial meeting a client’s personal details pertinent to the project’s
objectives (rather than research objectives) were recorded on a management
information system.
The data regarding ICDs is derived from the main database of SAFE’s Access
Project. Where available this recorded the information gathered by project
workers at the time of first contact, and is based on self-reporting and project
worker assessment. The focus of data collection was to ensure that clients
were able and supported to exercise a suitable option for Direct Payment.
This means that the data and bases used are not always consistent and that
there are some anomalies in the figures. However, the data collected does
provide broad overviews of the client base, their attitudes and preferences for
Direct Payment and banking options.
Application process
Project workers completed a feedback form7 after each visit to a local branch.
All ten project workers completed forms documenting their experience with
branches. Project workers were asked to evaluate each visit separately and
rank their experience in terms of quality of service in several categories. This
covered the behaviour of the staff and the procedures that were encountered,
including requirements around identification and address verification
It is worth mentioning again that the number of surveys is skewed to the bank
branches where clients wanted to open accounts or felt they would be more
likely to succeed in account opening.
Knowledge reflects the possession of knowledge by staff, the
comprehensiveness of this as provided to them, and thence on to prospective
and actual clients. This extends to products and procedures, but also the
needs of clients. SAFE surveyed on specific areas of knowledge such as the
provision of identification and address verification documentation, account
opening procedures and likely outcomes.
Communication concerns all of the ways that the banks have of interacting
with clients, from marketing materials, telephone and internet provision, and
branch staff’s behaviour. In this rating SAFE considered how well information
was communicated to customers and project workers, concerning bank
account options and features, as well as the processes involved in opening
accounts. This also factors in ‘softer’ considerations about the way that staff
engage with the clients and supplements the analysis of the marketing
materials found earlier in this report.
Flexibility measures the adaptability of the banks, and the ability to take
account of the widely differing circumstances of customers, rather than
insisting on a strict adherence to inflexible procedures. Clearly this is
constrained by procedures, but it measures the efficacy of implementation of
procedures that do exist, taking into account the needs of the individual.
Procedures is an assessment of the officially designed processes that banks
have that facilitate account opening, covering the elements of whether the
application materials are available, whether a suitable account is actually
7 Please see Appendix A
made available, and whether credit scoring is factored into decisions for basic
bank account applicants8.
These different elements are derived from the factors measured in the
surveys by project workers. A copy of the survey can be found in Appendix 1.
In addition to these factors, data was gathered on the basic details (time,
location, staff involved and duration) of the visit, the purpose of the visit, and
the outcome. This allows for some tentative conclusions about the interaction
of these variables with the key parameters for financial inclusion achievement
(for instance, is account opening more likely during quiet times within a
branch?). However, this type of information is clearly limited by the size of the
samples and the other limitations of the exercise.
Identification/address verification
This information is again derived from the main project database, and the
work of the project workers in facilitating access to Direct Payment. It needs to
be borne in mind that obtaining information from individuals, as a result of the
type of groups SAFE was engaging with, was on occasions impossible. This
means that the information on accounts that SAFE does have is unlikely to be
either from the most excluded or the least. The former often do not engage
with ongoing support which prohibits our finding out what (if anything) they
have achieved, while the latter are least likely to require ongoing support.
The main information gathered included the type of account used for Direct
Payment, and is limited to where an account was made available for this
purpose where it had not previously been. Mostly this means opening a new
account, but in some cases (less than 50) this would mean facilitating access
to an existing account, through reactivating a dormant account or tackling
issues such as debt or loss of access. Anecdotal information about the types
of intervention required (such as helping a client to apply for a passport, or
ensuring that the client’s concerns about charges on the account and
consequent debt were addressed) to achieve account opening in these cases
was captured, however it cannot be easily amalgamated for analytical use.
Marketing materials
This analysis was limited to basic bank account publications and application
forms and it was therefore assumed that the target market was the unbanked
or those with limited financial products. Analysis was also considered in the
light of the Banking Code of March 2005 key commitment:
· We will make sure that our advertising and promotional literature is
clear and not misleading and that you are given clear information about
our products and services.
and also the specific guidance that:
8 Whilst basic bank accounts should not include a traditional ‘credit score’ many banks are obliged to
run checks to ensure that their prospective customers are not bankrupts or holding unresolved debts
(according to terms on different accounts). However, anecdotally SAFE found on some occasions staff
in certain banks would consistently put basic bank account applications through as current account
applications, thus attracting credit scores.
· We will make sure that all advertising and promotional material is clear,
fair, reasonable and not misleading.
Marketing materials and application forms for basic bank accounts were
collected from 8 banks and 1 building society during the first half of 2005. The
institutions’ literature, meaning leaflet and application form if separate, was
assessed by a team of six project workers. The process was informed by the
experience of the SAFE Project Workers who used the materials on a regular
basis with people from the target group.
Ratings of 0 (poor) to 2 (good) were given to each brand for their materials on
the basic bank account. A focus group was then held to discuss individual
assessments and determine an average rating for each brand’s materials.
The areas considered were as follows:
Format of Material
The general format of the various materials was considered, whether it was a
brochure, a flyer, an A4 booklet etc, measuring how effectively this worked for
financially excluded clients. This extended to an analysis of the layout of the
publications, how easily navigated they were, whether sections were clearly
delineated, and whether they cross-referenced to other publications.
Higher marks were awarded for: Lower marks resulted from:
· Dedicated basic bank account
· Basic banking information
being difficult to locate within
other literature
· Clearly signposted sections · Multiple cross-references to
other sources of information
· Good legibility · Dense or difficult to read text
· Clear fonts · User-unfriendly formats
· Materials which indicated a
positive approach to the client
· Materials which marginalised or
stigmatised the client group
· Inclusion of irrelevant
information such as information
about other products
Writing Style
There was an analysis of the writing style within the various documents. It
covered the language used in terms of vocabulary, syntax and jargon. It also
covered the style of the text. As financial exclusion intersects with such
issues as basic skills and English as a second language there is an
importance in ensuring that materials are easily understood and facilitate
Higher marks were awarded for: Lower marks resulted from:
· Simple communication of key
· Complicated sentence
· Easily understood words · Proliferation of jargon or
complex terms
· An overly formal writing style
which reinforces negative
perceptions of banking
Basic Bank Account Features
The specific way in which features of the basic bank accounts were presented
in the documents was considered. It is important that full information is
provided in a clear way so that customers are able to obtain crucial
information about what an account in question does, and equally importantly,
does not do.
Lower marks were awarded where information was incomplete, avoided
mentioning restrictions on the account, or assumed more knowledge than is
likely amongst unbanked people.
Disclosure of key terms and conditions
Terms and conditions contain a lot of information of a technical nature, and
therefore there is only a certain amount that can be done to make this
accessible to everyone. However, this challenge can be overcome by well
thought-out literature, which promotes accessibility rather than confusion and
barriers to entry.
Higher marks were awarded for: Lower marks resulted from:
· Good accessibility · Excessive use of jargon
· Good legibility · Use of ‘small print’
· Comprehensiveness · Missing or impartial information
Contact Information
Availability of contact information is particularly important as customers may
wish to inform their decision by asking questions about the product. Clients
new to financial services are often more likely to have questions and need
additional support in opening an account. Vulnerable consumers or those
with disabilities need to have different options available to them when
contacting the branch which are appropriate to their needs (for instance,
internet and phone access when a customer has limited opportunity to leave
the house).
Higher marks were awarded for: Lower marks resulted from:
· Obvious and easily located
contact details
· No contact details
· Provision of variety of contact
· Address only
· Provision made for people with
different needs (e.g. Braille)
· No provision for people with
different needs
· Freephone numbers and
detachable cards
· Premium rate telephone
number only
Overall accessibility for clients
The mark for overall accessibility reflects all of the other categories listed
above. It is intended to give an overall suggestion of how the various
published literature either facilitates or hinders access to basic banking
facilities amongst people who are traditionally ‘financially excluded’.
About the people
Whilst SAFE has helped people open bank accounts over the last three years
and continues to do so, this specific report is based on data collected over 9
months during the course of a project helping people transition to Direct
Payment. 2437 people were seen.
SAFE worked primarily with particularly hard-to-reach and vulnerable groups
of people, for instance, people experiencing homelessness or in temporary
accommodation, refugees, offenders and ex-offenders, those with substance
mis-use or mental health issues and the long-term unemployed, among
others. Clients came into contact with the service through SAFE’s presence
in job centres and community centres as well as through referrals from
community, housing or other organisations. SAFE worked with over 150
organisations in the course of its outreach.
The following graphs provide details of the group of people SAFE worked
Fig 2: Account ownership at first contact meeting
Base: 2437 cases
60% of clients did not have an account of any kind when they first met with
SAFE. 17.2% already had a Post Office card account and 0.2% had dormant
Dormant account
CU account
Basic bank account
Current account
No response
No account
Fig 3: Age of clients
Base: 2437 cases
Where age is known the majority of SAFE’s clients were between the age of
21 and 50.
Fig 4: Clients by type of benefit received
Base: 2437 cases
71% of SAFE’s clients were on Job Seekers Allowance.
Whilst SAFE recognises that not everybody on Job Seekers Allowance is
actively seeking work, the fact that 71% of clients were on the benefit
suggests that it would be to their advantage to have access to transactional
banking facilities, since an increased number of mainstream employers state
this as a prerequisite for being given a job.
No benefit
Other benefits
Over 65
20 and under
Not known
The Informed Choice Discussion
In helping people access financial services SAFE believes in the importance
of empowering the individual to make their own informed decision. To this
end SAFE provides independent information and a discussion framework to
inform its clients’ understanding of the different variables involved in the
decision and to help them understand what choices they have.
In the case of helping people open basic bank accounts, SAFE provided oneto-
one impartial information about Direct Payment, the options available for
receiving benefits directly and what processes were involved in each option.
Where clients wanted to open a basic bank account, SAFE project workers
used comparative tables to explain the different features and terms and
conditions of accounts. Clients were then encouraged to make their own
decision based on preferred features as well as personal circumstances (for
instance, geographic proximity to the bank). Once clients had made a
decision SAFE helped them to gather further information about their chosen
account, as well as start the application process.
Free, independent and accessible services, such as those provided
by SAFE, should be more widely established to facilitate access to
banking for vulnerable consumers or people on low incomes. The
provision of these services should be evaluated over the long term to gain
an understanding of what the impact is on longer term account holding and
financial capability.
The following graphs show clients’ stated preferences for account opening.
The preference may have been recorded at any time during the informed
choice discussion. Available data does not show a ‘before and after’
discussion preference.
Fig 5: Stated preference for Direct Payment
Base: 2437 cases where an account has been opened
Overall preference among the group SAFE served was for a bank or credit
union account (53%). Of the total 45% wanted to open a new bank or credit
union account and 8% wanted to use an existing bank account. However
32% stated the POca as their first preference, with 26% wishing to open a
new POca.
Fig 6: Stated preference for Direct Payment by age
Base: 2437 cases: 914 age not known, 215 20 and under, 497 21-30 years, 399 31-40 years,
254 41-50 years, 121 51-65 years, 37 over 65
Preference for a basic bank or credit union account for Direct Payment was
most prevalent in people up to 30 years of age.
Overall Under 20 21-30 31-40 41-50 51-65 Over 65 Age
Order book to new Bank or CU account Order book to new POCA
Order book to existing Bank or CU account Existing Poca to Bank/CU acc
Order book to existing POCA Other
Existing Poca to bank or CU
Order book to existing bank
or CU account
Order book to new Poca
Order book to new bank or
CU account
Fig 7: Stated preference for Direct Payment by benefit received
Base: 2437 cases: 1730 on JSA, 585 on other benefits, 73 on pension, 49 not on benefit (not
shown here)
Stated preference for a basic bank or credit union account was most strong
among those on Job Seekers Allowance.
Key findings and wider interpretation of data
· The majority of clients did not have access to transactional banking
facilities before contact with SAFE
· There was an overall preference for a bank account over POca stated
during the course of the informed choice discussion
· Most resistance to opening new accounts of any kind was displayed by
people over 65 years of age, but existing account holding in that group
was also more likely
· 52% were given assistance in opening an appropriate account, with a
further 13% given support in requesting an invitation letter for a POca9
Direct Payment and the options available for transitioning to it are various.
The products for receiving Direct Payment are also numerous. For instance,
the Post Office card account does not allow for wages to be credited to the
account whilst bank accounts do. However, whilst all basic bank accounts
allow withdrawal of benefits at the Post Office, not all current accounts with
the same bank do. Again, whilst all basic bank accounts allow withdrawals at
the Post Office, only some allow deposits. Some current accounts also allow
withdrawals and deposits at the Post Office. Obviously competition is an
important driving market force and product differentiation of this kind is
ultimately an advantage to the customer. However, the decisions to be made
9 3.4% were recorded as ‘not known’ and the remaining 31.6% were not recorded as having support
needs above and beyond the information provision of the informed choice discussion
Overall JSA Other Benefits Pension
Order book to new bank or CU account Order book to new Poca
Order book to existing bank or CU account Existing Poca to bank or CU account
regarding Direct Payment and what sort of an account to use for it require
complex information to be understood and decoded so that an informed
decision can be made.
The informed choice discussion provided an accessible space for people to
find out more about Direct Payment and the choices available to them. It
gave them the opportunity to talk about particular barriers that they perceived
in stopping them from either making a decision about Direct Payment or
actioning their choice. Providing free, independent and impartial advice on a
one-to-one basis can be particularly helpful in informing a decision. It also
allows individuals to discuss their perceptions, needs and opinions. This is
particularly important among hard-to-reach groups of people who are often
vulnerable, feel disenfranchised and excluded. Such provision of information
promotes inclusion and facilitates access.
Marketing and materials associated with bank products and services can have
an impact on the perceived accessibility of the product. Existence and
availability of product information along with key marketing messages form a
significant first point of access for consumers. It is important to consider the
content and vehicles for delivering information and how well they reflect the
needs of the target group. The analysis of basic bank account marketing and
materials was undertaken to approximate their appropriateness in reaching
people experiencing financial exclusion. Analysis was considered in the light
of the Banking Code of March 2005, which makes the following commitments:
· We will make sure our advertising and promotional literature is clear
and not misleading and that you are given clear information about our
products and services
· We will make sure that all advertising and promotional material is clear,
fair, reasonable and not misleading
More detail about rationale for scoring can be found in the section on
A certification for marketing material should be created by an
independent regulator. The criteria for this should be developed with the
needs of people who are most financially excluded at their core.
Fig 8: Rating of different banks’ marketing materials where 0 = poor, 1 =
acceptable and 2 = good10
Bank Format of
Basic bank
of key
terms and
for clients
Bank A 0 0 1 2 0 1
Bank B 1 2 2 2 2 2
Bank C 0 1 1 0 2 1
Bank D 1 1 2 2 2 2
Bank E 1 1 2 2 2 2
Bank F 1 1 1 0 2 1
Bank G 2 2 2 1 1 2
Bank H 0 2 0 1 1 0
Bank I 0 0 1 0 0 0
Key findings and wider interpretation of data
· There is wide variation in the provision of marketing and application
materials for basic bank accounts
· A number of existing marketing tools appear limited in facilitating
access for the group basic bank accounts are intended to serve
Some banks’ materials clearly facilitate access whilst others do not. It would
appear that in those instances where the materials are good, thought has
been given to the target group in question. Conversely, where materials do
not perform well, it would appear that this is because little thought has been
given to the target group and materials are simply ‘stripped down’ versions of
current account literature. The financial services industry needs to recognise
10 It should not be inferred from this table that the order or ranking corresponds to other orders or
rankings in other parts of the report.
lower income customer base and profile and orient marketing and application
materials towards the target group.
Basic bank account materials should be written in clear, concise English in
readable print with carefully organised formats. Information should include:
o Features of the product, including what the product does not do
o Key terms and conditions, including charges and penalties
o Information about how to open the account, including guidelines
on the types of less traditional identification and address
verification that can be used; offering a free helpline where
clients can discuss their own situation
o Opportunities for upgrading after a period of time
o Contact information
NB: It is important to note that since SAFE’s work was done it has met with
banks individually regarding this information. SAFE has received positive
feedback from its work and steps are being made by individual banks to
improve their literature. Other banks may also have updated their literature
since SAFE’s analysis.
About the product, the basic bank account
The question of products offered to those on low incomes is not the main
focus of this report. Research by NCC/Policis11 analyses the needs of low
income customers, how well these are being met currently and what product
innovations may improve the situation. However, the basic bank account
product itself has an important role to play in facilitating financial inclusion and
is therefore worthy of mention.
Fig 9: Basic bank account product features (following page)
11 NCC/Policis factsheet ‘Basic Banking. Getting the First Step Right’, August 2005
Research should be undertaken to consider ways in which innovation
in product design can facilitate financial inclusion, serve client needs
and remain commercially viable.
The basic bank account product should be designed with the needs
of the target group at its core to prevent discrimination and
‘exclusion within inclusion’.
The financial services industry, Government and others should invest
in support for newly banked people to enable them to use the
account in a way that is appropriate to their needs but which remains
commercially viable.
Bank Name &
Account Name
Post Office
Access -
withdrawal (w)
or deposit (d)
Amount to
Open Account
Cash Machine
Alternative to
Chip & Pin Card
Free Buffer
Direct Debits
and Standing
Charge for
unpaid Direct
Debit Card
(Solo or
Impact on Financial
Provides local
network, with
personal contact.
Should not be
only face-to-face
Important to be
zero, so that lack
of ready cash is
not a barrier to
essential, but
should not be
only access to
Alternatives to
chip and pin
facilitate choices
and access
Allows for small
element of
security for those
unused to
banking and on
tight budgets
Facilitates cost
savings on
regular bills, and
builds budgeting
Can be
portion of
income and
start debt
spiral. No
charge can
indicate other
penalties, such
as account
wider financial
through noncash
acceptance in
shops and
over the
internet is
Restriction or
implies 2nd
for increasing
access to
advice and
hinder money
from other
Abbey National w None Yes Chip & Sign No Yes £35 No No Quarterly
Basic Account
Alliance & Leicester w & d None Yes Chip & Sign No DD only £34 No No Quarterly
Basic Cash Account
Barclays w None Yes Paying in book No DD only £15 No Yes Quarterly
Cash Card Account
Co-operative Bank w & d None Yes Chip & Sign No Yes £19.50 Yes Yes Flexible
Halifax w None Yes Chip & Sign No Yes £39 No No[1] Quarterly
Easycash Account
HSBC w None Yes Chip & Sign £10 Yes No No No Quarterly
Basic Bank Account Account closed
if 3 unpaid
Lloyds TSB w & d None Yes Chip & Sign £10 Yes No No No [2] Quarterly
Basic Bank Account Account closed
if 3 unpaid
Nationwide w £1 Yes Yes No Yes £30 No Yes Quarterly
FlexAccount Cash
NatWest w None Yes Chip & Sign No Yes £38 Yes Yes Monthly
Step Account
Royal Bank of
w None Yes No No Yes £38 No Yes Monthly
Key Account
[1] Branch counter can only be utilized to withdraw more than £300 in cash from account. [2] Branch counter can only be utilized to withdraw more than £200 in cash from account.
Key findings
· There is little differentiation between basic bank accounts offered.
· There are a number of restrictions placed on basic bank accounts
which customers are not often made immediately aware of in marketing
literature and which cannot therefore inform their decision as to which
account to open.
· There is little opportunity for banks to profit from basic bank account
customers as a result of the attendant risk of including features (such
as overdrafts) that would enable this.
The basic bank account product has been developed primarily in response to
the Government’s Direct Payment initiative. Its aim is to provide an
introduction to banking and its technologies as well as a step towards greater
financial inclusion. It is therefore important that the product itself is set up in
such a way as to facilitate greater skill and confidence among its users in
managing their money through an account. This means that the ways in
which customers access their accounts need to be as unthreatening and
appropriate as possible (within commercial considerations) and not further
reinforce existing feelings of alienation from banking and banks, whilst
allowing for a small element of leeway as customers adjust to non-paper
However, banks have begun to restrict certain features of the basic bank
account, such as the buffer zone and counter service, suggesting a tendency
to underserve the needs of low-income clients. Whilst, this is understandable
in the context of the perceived current profitability of these customers, these
restrictions hinder access, undermine the likelihood of increased financial
capability and therefore mitigate against future profitability.
Restriction of branch access to large transactions, or even total prohibition, is
detrimental on several levels:
· It clearly distinguishes basic bank account holders, thus creating
exclusion within so-called ‘inclusion’;
· It effectively excludes those who have issues with technology or
remembering PINs, and
· It hinders secondary branch functions, such as marketing and sales.
Those accounts that provide the widest range of functions and access
optimise the potential for building financial capability, but also maximise the
potential for mistakes and consequent problems. Thus direct debits, debit
cards and buffer zones can all be useful features, but misuse can be
excessively penalised through high charges or account closure.
The application process
Visiting the bank and applying for an account are key milestones on the path
towards achieving financial inclusion. The financial services industry has a
particularly important role to play in promoting positive messages about
financial inclusion and ensuring that these messages are reflected in the
experiences individuals have when they interact with banks. More often than
not a client will come into contact with a bank through its local high street
branch. Alongside their corporate activities, the performance of banks at a
local level is particularly important in defining how well they contribute towards
financial inclusion. In this section SAFE considers how well financial
institutions engage with customers experiencing financial exclusion and
whether any improvements can be made.
In particular SAFE considers the procedures of the bank with regard to its
implementation of guidelines to reduce money laundering and the
performance of its staff across four parameters: knowledge, communication,
flexibility and procedures for account opening (more detail is provided in the
methodology section). In developing these criteria for measuring bank
performance SAFE used the Banking Code. In the Banking Code12, standards
are set for good banking practice around processes and products. For the
purposes of this report we have considered those that impact on low income
customers and those seeking basic bank accounts, in particular the following
key commitments:
· Before you become a customer we will give you clear information,
explaining the key features of the services and products you tell us you
are interested in.
· [We will] offer you a basic bank account if you specifically ask, and
meet the qualifying conditions for one.
· When you have chosen an account or service, we will give you clear
information about how it works [and] the terms and conditions.
· We will deal quickly and sympathetically with things that go wrong and
consider all cases of financial difficulty sympathetically and positively.
These were the basis for the various criteria by which the project workers
assessed their visits to the banks and building societies, as explained in the
methodology section.
12 The current edition of the Banking Code took effect in March 2005, and is available through the
British Bankers’ Association.
Practical Barriers
There are various ways in which applications for basic bank accounts have
been hindered.
Examples of this include:
· Branches instituting an appointment system for basic bank accounts
that ensures that a client will not be able to open the account for a
significant period of time. Instances of this were noted that included
a three month waiting list;
· Not having the application materials for a basic bank account
available in the branch and not being able get hold of these within a
short period of time; and,
· Explicit statements like ‘we cherry pick our customers’.
Visiting the financial institutions
The kind of customer service that a bank’s staff provides is important in
enabling the bank to differentiate itself from competitors who, by and large,
provide similar products. This is especially the case in the basic bank account
product range where there is little product differentiation.
Frontline branch staff will often be the first point of contact for a prospective
customer. The member of staff they encounter has the ability to reinforce
negative views of the industry or the opportunity to positively promote the
bank’s brand and the concept of financial inclusion.
To increase the likelihood of full and consistent compliance with the
Banking Code the Banking Code Standards Board should publish the
findings of its mystery shopping exercises.
The financial services industry should empower its customers to
enable them to know when banks’ behaviour is unacceptable and to
be able to challenge this when it happens. To this end, the Banking
Code should be more widely available and produced in different formats
(interactive screens in branches for instance).
The financial services industry should take full responsibility for
enabling and incentivising its staff to sell its products and provide a
good level of service to all, no matter what their background.
Throughout the account opening process it is imperative that staff are aware
of their bank’s policies and wider commitments. It is also important that
branch staff demonstrate wisdom in the way in which they balance conflicting
priorities and procedures in the light of individual customer’s needs.
In order to analyse the data collected, SAFE used four parameters to
measure branch activities which promote financial inclusion: knowledge,
communication, flexibility, and procedures. An outline of these is included in
the section on methodology. These are derived from the spirit of the
commitments in the Banking Code that are mentioned above.
Across all visits where the purpose was account opening, a basic bank
account was made available on 89% of occasions. Where an account was
not made available, it means that some action of the bank or its staff
prevented the individual applying for a basic bank account where it was
required, for example being required to wait three months for an appointment
to apply for a basic bank account. Where the account opening process was
successful, this rose to 100%, where the decision was pending it was 94%
and where no account was opened it was 62%. There is a clear correlation
between an account being offered and the likelihood of the account being
Practical Barriers
A client seeking employment met with a SAFE project worker, as he had
previously had to turn down work due to not having a bank account. He
was mainfestly wary of banks, having been refused several times due to
lack of adequate documentation, as he does not hold a tenancy or pay bills
in his own name. He does, however, have a passport and a benefits
entitlement letter.
After discussing options with the SAFE project worker, he liked the idea of
opening a specific basic bank account for which he could apply over the
phone and would only have to visit the branch to present his ID and
address verification documentation.
The phone application went smoothly and he was told that the two forms of
ID that he was able to produce would be acceptable, as long as he signed
a ‘financial exclusion’ form when he went into the branch, which would
suffice in lieu of producing the normally required third or fourth. However, at
the branch he was told that he would need a letter from his GP as a 3rd
piece of ID documentation.
Despite this setback, the client felt confident after this experience at the
bank and duly returned with the letter from his GP. His documents were
photocopied and ‘sent off to head office’. However, a few weeks later he
received a letter from ‘head office’, saying that he could not open the
account as he had not produced sufficient documentation.
The client became disillusioned, as he had done as instructed at every turn,
and had still failed to open the account, and therefore was no longer
interested in opening an account for future employment.
opened (as one would expect). Where basic bank accounts are not being
made available it could be argued that this contravenes the Banking Code.
There does not seem to have been significant variation in the waiting time or
length of queues between those occasions where an account was opened
and where it was declined, but there was a significant difference in the length
of the conversation. Where an account was opened the average conversation
length was over 35 minutes, compared with around 10 minutes when the
application was unsuccessful. How busy a branch is does not appear to be a
factor in the likelihood of an account being opened, however the length of time
staff are prepared to invest in the encounter with the customer does.
Anecdotally, SAFE project workers felt that there was a better response from
bank staff in the morning, but this does not seem to correlate with account
opening success rates, which remain fairly constant throughout the day, and
is clearly subjective. On average, clients waited 7 minutes to be seen by
anyone. They waited 13 minutes to be seen by a person who could help
them. In some cases clients waited up to an hour to be seen by a person who
could help them. The average length of conversations was 25 minutes.
The following tables show the results from project workers’ surveyed
experiences. The scale (for all tables) simply rates 0 for a project worker’s
perception of a bad experience in this area, 1 for an acceptable experience
and 2 for a good experience.
Fig 10: Amalgamated ratings across all banks, all visits and all purposes,
representing 83 visits:
Knowledge 1.2
Communication 1
Procedures 1.3
Flexibility 1
This table shows that on a broad scale project workers had acceptable
interactions with branch staff.
Fig 11: Ratings for those visits where the purpose of the visit was to open an
account (as opposed to information gathering or account follow-up),
representing 6313 visits:
Knowledge 1.2
Communication 1.1
Procedures 1.4
Flexibility 1.1
This table highlights the knowledge and implementation of procedures over
any of the other parameters.
13 On 3 of these occasions the outcome of the application process was not recorded
Fig 12: Ratings for the occasions on which the purpose of account opening
was realised and an account was opened successfully, representing 25 visits:
Knowledge 1.5
Communication 1.5
Procedures 1.5
Flexibility 1.4
Where account opening was successful branch staff were rated higher across
all parameters.
Fig 13: Ratings for the occasions on which no decision on the application was
reached, and a decision was still pending, representing 18 visits:
Knowledge 1.1
Communication 0.8
Procedures 1.5
Flexibility 1.2
This table shows again that branch staff have a better than acceptable
awareness of the branch’s procedures. However, this sits in contrast with
their less than acceptable level of communication and may account for the
pending decision in these cases.
Fig 14: Ratings for the occasions on which the application was declined,
representing 15 visits:
Knowledge 0.8
Communication 0.6
Procedures 1
Flexibility 0.4
Interestingly, this table highlights again that staff are generally aware of the
procedures involved in account opening. However, their limited
communication and flexibility resulted in applications being declined.
Key findings and wider interpretation of data
· Basic bank accounts are not always made available, even where they
are offered. This contravenes the spirit of the Banking Code.
· Branch staff tend to have a reasonable awareness of their bank’s
procedures and products but are not always able to communicate
these to the target group as well as might be expected.
· Branch staff tend to be less good at applying flexibility to these
procedures or communicating effectively with customers.
· The commitment in the Banking Code to ‘consider all cases of financial
difficulty sympathetically and positively’, does not seem to extend to
prospective customers, with customers on low incomes often facing
barriers that hinder their accessing even a basic bank account.
Overall the surveys show branches performed at an ‘acceptable’ level. This
level of service can perhaps be more easily accommodated by the majority of
bank customers. However in relation to vulnerable groups this level of service
has an impact on the accessibility of the service and reinforces negative views
of the financial services industry among low income groups. Without further
research it would be difficult to evidence whether the level of service was as a
result of the fact that the clients SAFE worked with required additional
flexibility which staff were simply unused to providing; or whether the level of
service resulted from staff’s perception of the client group as unprofitable and
therefore simply not worth the effort. In SAFE’s judgement it is a mixture of
the both.
All the surveys showed that branch staff had a reasonable understanding of
their bank’s procedures. However, branch staff scored lowest marks for
flexibility and communication, confirming SAFE’s experience that staff can
improve in their ability to serve people with minority needs. Given the
commitments in the Banking Code to give ‘clear information’, this is an area
that should be looked at more closely. Future staff training should ensure
these aspects of the Banking Code and how they can be practically
implemented are covered.
Staff behaviour correlates to achieving financial inclusion. Where staff were
most knowledgeable, most able to communicate effectively with the customer
and most able t

ID: 36443
Author(s): Clark, Adam; Forter, Alexandra
Publication date: 01/11/05

Created: 02/01/06. Last changed: 02/05/07.
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