THE BLOG

UK Banking System Gambles With Brits' Livelihood

18/03/2014 11:03 GMT | Updated 18/05/2014 10:59 BST

Coinciding with an unforgettable week of racing at Cheltenham, Britain's gambling industry has had some rather less sunny headlines. Recent figures from the Campaign for Fairer Gambling revealed that, across the 55 most deprived boroughs in the country, more than £1.3bn was gambled on fixed-odds betting terminals last year, £470m of which was lost. It is up to consumers whether they gamble or not, but many who cannot afford it are being encouraged to throw away their money on the outcome of a random chance. Sadly, this is the escalator down to the nightmare cycle of debt, high APRs and roll-over deals.

Right now, the emphasis on easy, technology-enabled gambling and credit overpowers any sense of the importance for every family to save, if not a lot, at least a little, to create a cushion against emergency. Whilst personal accountability is paramount, the cultural and retail environment plays a role. The proximity of bookmakers to banks and loan operations on many of our high streets is no coincidence. There is now a broken system built on gambling, spending and lending with ruthless operators setting their sights on financially vulnerable families.

The last stop on the journey into the whirlpool of debt is the 3-click payday loan application, or, perhaps worse still, the door-step loan shark. The attraction of payday loans is that they offer a simple and fast way of borrowing small sums of money without a long-term commitment. However, it seems that increasing numbers of consumers are using these funds to pay for gambling habits. As bookies and payday lenders hoover up the cash, good families get backed into a financial corner.

It's easy to point the finger at the bookies. Even easier to slate the payday lenders. But the reality is that in every ocean there will be predators and there should be lifeguards in place to make sure the swimmers are safe.

It is this role that the banks might play. Their trust ratings are at an all time low, and their raison d'etre is under the microscope. Politicians think that more competition is required, but in reality, a bit more soul would be a better starting place.

The banking sector needs some reinvention and a new attitude. In Britain's credit-driven society, helping people to save, to manage their budgets and to de-stress their lives is a role that banks, with their current account engines, could easily fulfil. But they won't. They can't.

Sadly banks, old or new, sit on the same infrastructure. They are constrained by what ancient systems and ancient history dictate. They have a tsunami of regulatory, operational, behavioural and technology problems bearing down on them. Helping families is not the principal agenda here. Survival is.

Our view is that banks may no longer be the best people to handle current accounts. At Ffrees, we are not a bank, but we run the fastest growing current account in the UK. Unburdened by the problems that are killing the banks, we can operate with a focus on our customers, and our particular focus is to help them save.

Our model allows us to encourage families, regardless of wealth or social status, into a saving mentality. We turn rewards into savings, we offer jam jars to help customers save up and to manage their finances, by automatically setting money aside each month to pay their bills. These are just some of the tools that we, as a current account provider, will be providing this year to support families.

Saving up with Ffrees is not going to solve the problems of poverty or prevent families over-extending. But saving hundreds of pounds a year acts as a buffer against an unexpected crisis, and the consequential payday loan and debt spiral. Thinking about saving on a daily basis means less focus on borrowing. Who knows, that change of mentality might just make the trip to the bookie seem less attractive too?