The UK has one of the most developed banking systems in the world but the BBC reports that “1.2 millions do not have a bank account” and must pay extra on their utility bills. This is clearly nonsense it might be 1.2 million people but most will not be Britons. Every job in the formal economy pays into your bank account and so do most state benefits.
The un-banked in the UK will be migrant workers and a number of Britons too old, too young, too ‘diverse’ or too thick to operate bank accounts. This demographic is identified in the report of the Financial Inclusion Commission which is long on recommendations but rather short on facts.
There is a huge problem in the UK because most bank accounts are free. That means that the banks have to make money by selling people financial services they don’t need and lending their deposits. Poor people are bad customers because they don’t buy financial services and they don’t make big deposits. The do borrow money but often don’t pay it back. It get’s worse, banks have to comply with KYC and AML so if you don’t have a simple UK history you are simply not worth the risk. It is no surprise that the ads for banks show middle class families.
The report makes lots of sensible recommendations but the word “competition” only appears once and in the context of regulation. The solution is to dramatically increase competition in retail banking sector by abolishing free banking and creating a favourable regulatory environment for crypto-businesses addressing this market segment.