The Evolution of Banking

Banking has changed a lot over the last 20 years. Gone are the days when you could only visit your bank between the hours of nine and five, Monday to Friday. The rise of the internet and extended opening hours mean that you can arrange transactions and check your balance at any time of the day or night.

The increased availability of accounts with an online banking facility has been absolutely essential for the lifestyles of today. Working hours have increased across the board, with standard working hours of 8.00am until 6.00pm becoming the norm for the majority of office workers.

Banks have had to change to keep up with demand and improved technology is not the only difference in the way that they work. The whole banking industry has changed significantly over the last couple of decades and they are offering far more financial products than at any time before.

How Banks Have Changed

It used to be that banks worked on a very local level, offering loans and savings accounts solely to customers in their area. With many smaller banks having being taken over by larger national banks over the past few years, this business model has changed significantly.

There are all sorts of benefits to the individuals using the banks’ financial products. They have lowered the costs of banking for many of their customers and transactions take place at a much faster rate than in times gone by. However, there is still a high demand for the personalised service that can only be maintained by staying with a local branch which has the best interests of its customers at heart.

Technology

It is technology, though, that has created the largest change in the banking industry. The widespread use of online banking means that transactions can be completed globally 24 hours a day. Money transfers are almost instantaneous and customers can keep abreast of the exact state of their balance at any time.

Online banking has also meant that costs are significantly reduced as banks don’t need to employ as many people. These savings are in turn passed on to customers, so not only is online banking more convenient, it is also far cheaper for the majority of people.

The move towards technology-based banking is only set to increase over the next few years. The advent of apps for devices such as the iPhone means that soon we will be making transactions using just a mobile phone. These advances will decrease the cost of banking even further for many individuals. However, there is still a lot to be said for going into your local branch and actually speaking to an advisor, at least once in a while.

The reality is that banks today are totally different from those of a couple of decades ago. The majority are now owned by larger, more powerful institutions and this has totally changed the landscape of the banking world. They are able to offer a far broader range of services and products at competitive prices, allowing the average consumer far more choice.

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Darling to optimistic about end of recession

Earlier this month the Chancellor of the Exchequer, Alistair Darling, indicated that there was a chance that the recession in the UK could be over by halfway through this year. Read more

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Majority of parking fine appeals won by consumers

The vast majority of consumers end up winning parking fine appeals, according to a recent report. The report indicates that a massive 94% of consumers win parking fine appeals, and this happens when they go through a public appeal against parking tickets. In six months just over 9500 Westminster issued fines were taken to an adjudicator, and over 8900, or 94%, were lost at appeal. Read more

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Consumers need to budget more as the cost of living increases

As the cost of living increases consumers need to be more aware of ways to budget to make their cash go further, one financial expert has advised.

Because of this Norwich and Peterborough Building Society (N&P) has asked its customers to provide their tips on how to budget effectively.

Advice includes budgeting for utility bills, putting aside money for events such as Christmas into a separate account, unplugging all electrical items and ensuring they are turned off, as well as planning a weekly food menu and basing a shopping list around this.

Gary Lacey, group product manager at N&P, said it is refreshing to see that simple tips, such as changing shopping habits or saving electricity can prove the most popular.

“By adhering to just a few of the tips our customers suggested, families can save little and often, which, in the long run, could add up to a decent amount of money,” he said.

Meanwhile, further research from N&P revealed that the majority of financial decisions for a family are made as a group.

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UK in debt denial

Some four million people are considered ‘overindebted’, but the majority are in denial about their finances and therefore do not seek advice assistance.

A survey conducted by debt management firm Chiltern found that one in 16 Britons spends over a quarter of their income on repaying debt but just one in 45 admit to struggling financially.
“There are lots of people who are officially overindebted, but two-thirds of them don’t think they have a problem,” said Joanne Gill from Chiltern.

“Unfortunately debts don’t go away, they need to be repaid and ignoring them will just make the situation worse. Anyone who is paying a quarter of their income to service unsecured debts should get help to put those repayments on a sustainable footing before the situation gets worse.”

The research found that people aged between 35 and 44 were the most heavily in debt, with East Anglia proving to be the most indebted region.

Whether they admit it or not, it seems that money is still on the brain for many people in the UK. A recent study from Alliance & Leicester revealed that 3.4 million Britons consider money to be the biggest concern in life, with 18 per cent worrying about it every day.

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BCC warns Bank of England against rate rise

The British Chambers of Commerce (BCC) has claimed that “economic damage” will be done in the UK if interest rates go up again.

The Bank of England’s monetary policy committee (MPC) will meet later this week to decide whether to put rates up or not.

According to the BCC’s chief economic adviser David Kern, the MPC should wait for previous rate rises to avert potential damage – and there have been five in the past twelve months – to take full effect before putting another increase on: “There are already signs that the housing market may have started to soften”, he said.

Mr Kern’s position is backed up by the latest monthly house price figures from mortgage lenders Nationwide, which show a seasonally adjusted gain in inflation of just 0.1 per cent for July, dragging down the overall inflation rate for 2007 to 9.9 per cent, well down on previous double digit showings.

A Reuters poll has also previously shown a comfortable majority of city analysts agreeing that rates are scheduled to go up to six per cent by the end of the year.

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Brits expect rates rise

The majority of Brits are expecting interest rates to rise again this year.

Lloyds TSB has published its Consumer barometer in which it revealed that most of us (77 per cent) are fully expecting another increase.

This is bad news for those with a mortgage, loan or credit card, however, the fact that most borrowers are expecting a rise may help them to be properly prepared.

Confidence in job prospects and job security fell during May, with more people believing that their position is vulnerable compared to the month previous.

“Last month’s interest rate rise did little to convince consumers that rates had reached a peak,” said Trevor Williams, chief economist at Lloyds TSB Corporate Markets.

“In line with the prevailing opinion of the financial markets, consumers believe rates will increase further this year.

“We’re just beginning to see the impact of May’s rate rise on consumers with sentiment on job security and prices starting to cool.

“Even so, there is still some way to go before the Bank of England will be reassured – they have emphasised that for inflation to stay low, inflation expectations must be anchored at low levels,” he added.

Borrowers concerned that interest rates are likely to increase in the coming months should try to account for a rise in repayments when budgeting.

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Don’t bodge it yourself (BIY)

Homeowners are being encouraged to avoid partaking in any bodge it yourself (BIY) over the Bank Holiday weekend.

According to Halifax Home Insurance, we spend £607 million on repairing the damage we do to our homes while trying to fix them up.

Traditionally the UK goes DIY mad over the Bank Holiday and this is often when the majority of damage is done.

However, Halifax is warning people not to take on a job which they are not qualified to do as it could end up costing a lot more to fix the job than it would have to have got a professional in originally.

“Whilst well planned and executed home improvements can add significant value to a home, getting it wrong can be a disaster,” commented Vicky Emmott, senior manager of underwriting at Halifax.

“We’d advise anyone planning any major improvements to their home to employ qualified and reputable tradesmen, rather than going it alone.

“Indeed trying to tackle certain areas that you are not qualified for, such as electrics or plumbing, could invalidate your home insurance and leave you liable for the cost of any subsequent damage,” she added.

DIY enthusiasts are encouraged to make sure there house is properly covered before embarking on a project.

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Brits worried about finances

The majority of us are more concerned about banking and our current financial situation than other threats to our security.

According to research by Abbey, the perils of global warming and international terrorism worry us less than managing our money.

Nearly one in four of us identify concerns about cash as the biggest threat to our quality of life, with only four per cent of us highlighting the environment as a pressing issue.

The Abbey Lifestyle Report looks at trends and concerns across the UK and this year’s report found that the majority of Brits are optimistic about the year ahead.

“People are generally positive about their quality of life in 2007 and the much-publicised issues around crime and the environment don’t seem to be denting this optimism,” said Sue Hayes from Abbey.

“The real concern for people is money and we are hoping that this is a signal that people are planning to get more engaged with their finances in 2007.”

Students were found to be the most optimistic demographic in the country, with 49 per cent believing that 2007 will herald an improvement to their quality of life.

This is in contrast to pensioners, with only 21 per cent holding the same belief.

If money worries are getting you down the best thing to do is face up to your problems and take control of your finances.

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Mortgage lenders to pay out £200m

A large number of major mortgage lenders may be forced to reimburse millions of former customers after a ruling on unfair exit fees.

It follows an ultimatum from the Financial Services Authority (FSA), which stated that lenders had to either justify the increased fees they charged people or revert to the original agreed amount.

The FSA estimates that as many as 2.3 million people who remortgaged in the last five years were overcharged by up to £200 each, meaning that lenders are likely to face a combined payout of around £200 million.

Mortgage lenders were given until February 28th to reach a decision and early signs are that the majority have chosen to reduce their exit fees.

“Certainly the impression we are getting as we go through the responses is that most lenders have gone for the original mortgage exit administration fee option,” said Robin Gordon-Walker of the FSA.

Those eligible for the refund must have remortgaged and been charged a higher exit fee than had previously been agreed.

Exit fees have more than doubled at some lenders since 2003 and people are being advised to contact their original mortgage company if they believe that they have been charged too much.

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Lloyds TSB’s annual credit card charge

People with a Lloyds TSB credit card that they do not use regularly face being charged for the pleasure of owning one.

It is the first sign that banks may be seeking to recoup the money they are likely to lose as a result of pressure to cut penalty charges, as predicted by research firm Defaqto this week.

The bank has announced that people who do not use their credit cards will be hit with an annual charge of £35.

However, Lloyds has failed to reveal what they define as low-usage, meaning many people may find themselves in a state of limbo.

People who have a card but do not use it at all have been told in no uncertain terms that they will be charged and are being advised to cancel the card and destroy it.

“It costs the bank money to issue cards to customers who are not using them. This is intended to get them to start to do so,” a spokesperson from the bank told the Guardian.

In a bid to tempt consumers into using their cards more often, Lloyds is offering zero per cent interest on all purchases until May this year.

Earlier this week Defaqto’s head of banking, David Black, said that he would be “very surprised” if free banking was still available in the UK in two years time.

“The first major provider to introduce charges for all customers is going to take a lot of flak but it is likely that the majority of the main providers will then follow the lead,” he said.

If you have an unused credit card with Lloyds TSB make sure that you cancel it and, for security reasons, cut it up before throwing it away.

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Bonuses won’t be blown this year

Many of the UK’s top earners are preparing to receive their bonuses this week and they already know what they will spend them on.

That is according to Barclays Wealth, which carried out research and found that 65 per cent have already planned what they will spend them on, while only five per cent will seek professional advice.

Although big bonuses are traditionally blown on champagne and expensive parties, Barclay’s research shows that many intend to invest them this year.

A total of 43 per cent of those questioned said that they will choose long-term financial investments over partying, with personal debt and mortgages the main focus.

The number one priority appears to be investing in a UK property, with 23 per cent saying this is what they intend to do.

This is closely followed by any other financial investment (19 per cent), clearing debts (15 per cent), holidays (12 per cent) and home improvements (ten per cent).

“It is encouraging that our research shows that people are intending to be responsible with spending their bonus this year,” said Jonathan Williams from Barclays Wealth.

The majority of workers are expecting to receive a bonus of between £5,000 and £25,000, with ten per cent anticipating an even greater sum.

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More Brits banking online

Britain is becoming a nation of internet bankers, with new figures showing that we are becoming more comfortable with sorting out our finances online.

New research, carried out by Lloyds TSB, shows that over two thirds of us do the majority of our banking on the internet.

This is a huge leap when compared to 2005, when just 18 per cent of Britons said most of their banking was done online.

Despite the common perception that the internet is the plaything of the young and not well used by older people, Lloyds found that, when it comes to banking, the opposite is true.

A staggering 70 per cent of people over the age of 50 said that they prefer to do their banking online, while those aged between 18 and 25 are the least likely to manage their finances in this way.

“The growth of internet banking is phenomenal and this year is set to break records,” said Anita Hockin, head of internet at Lloyds.

“This popularity isn’t surprising given the convenience of banking online. It’s possible not only to check your balance, but also to pay bills, set up standing orders and direct debits and move money between accounts at the touch of a button.”

Lloyds’ research found that of the ten per cent of people that do not bank online, the main reason given was that they do not feel the need.

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