Report calls on government to back community banking institutions

Published by the RSA, the report says this would help local communities survive after the pandemic

 (Photograph: Matt Cardy/Getty Images)
(Photograph: Matt Cardy/Getty Images)

The government and the Bank of England should provide additional support to community banking institutions in order to ensure the survival of local communities after the coronavirus pandemic, according to a new report from the research and innovation charity the RSA

The report, called The Road to Resilience: How Community Financial Services Can Help Level-up Britain, calls for a rethink of how the UK’s financial infrastructure and support is organised and says a greater focus on community banking, start-ups and civil society groups would ensure that financial support reaches those that most need it. 

It says the UK has lost almost two-thirds of its bank branches in the past 30 years, hitting rural and deprived communities the hardest. 

It adds that more than a million UK adults do not have a full bank account and about 3.2 million people are in severe problem debt. This creates barriers to participation in the economy, which have been exacerbated during the Covid-19 crisis, the report says. 

According to the report, the British banking industry needs to be reshaped to help solve these issues and get more credit into local communities. 

It calls for the Bank of England to create an endowment fund for community stakeholder banking, which it says would support the long-term resilience of the financial system. 

Matthew Taylor, chief executive of the RSA, said: “This pandemic has cut communities to the bone. It is vital that we get economic activity happening on the ground and ensure individual livelihoods. 

“But this crisis also presents an opportunity for change. Going forward, we hope that the government will take steps to build a financial system that is more resilient and people-focused than that which has served us so poorly in recent decades.”

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