Money: Post link spreads Co-op's message
The Co-op Bank is small but growing - and its ethical stance is a winner with customers, writes Paul Gosling
Sunday 16 November 1997
This is not the first banking tie-up with the Post Office, as Alliance & Leicester Girobank customers can already use Post Office branches, and the Co-op has been piloting its arrangement in the North-west. Some industry analysts expect the Post Office to sign similar contracts with other banks in coming years, moves which might console customers unhappy with bank branch closures.
The Co-op's announcement will mark a further phase in its phenomenal recent growth, and in the transformation of what was widely regarded 10 years ago as one of the most incompetent banks into one of the best.
Which? magazine this month rated the Co-op Bank as one of the three best for overall customer satisfaction. Its current account, which is primarily operated by telephone, was itself not rated a "best buy": it does not pay interest on accounts in credit, for example. But a survey of 4,000 Which? readers found that 84 per cent of First Direct customers were very satisfied, followed by 62 per cent of Alliance & Leicester's and 60 per cent of the Co-op's, compared with just a third of people who banked with Barclays and NatWest.
The high level of satisfaction with the Co-op may in part reflect the fact that it is the only bank that offers automatic compensation of pounds 10 if it makes a mistake on transactions. Much of the bank's recent growth in profile and popularity also reflects its rebranding into an ethical bank. This came out of a customer survey in 1991 that found that 20 per cent of its new customers had chosen to bank with it because of its ethical stance. This was news to executives because, apart from a refusal to trade with South Africa, at that time it had no ethical policy.
However, the survey showed the potential market for a truly ethical bank. A marketing campaign followed, which pledged that the bank would not lend money to any business engaged in any of 14 unethical activities. These included selling weapons to oppressive regimes, damaging the environment, factory farming and testing cosmetics on animals. The bank also pledged that it would not speculate against the pound.
The stance has undoubtedly been successful in attracting custom. The number of Co-op Bank customers has risen to 2 million and the value of their deposits increased from pounds 700m to pounds 2.8bn. The bank, however, remains a relatively small player nationally, with 3 per cent of the current account market and 5 per cent of the credit card market.
It is one of the biggest issuers of "affinity cards", which typically give 0.25 per cent of transaction value to a nominated charity, such as Oxfam and Amnesty International. The Co-op's affinity cards carry no annual fee, although interest rates are nothing special.
For regular credit card borrowers, as opposed to those who pay off their accounts in full each month, the Co-op's Visa Advantage card (with no charity link) which has an interest rate of just 10.9 per cent (7.9 per cent for the first six months) is well worth considering, and was rated a best buy by Which? It is clear that, for at least one bank, there is money to be made out of the ethical market, and it is a lesson being learnt by the Co-operative Wholesale Society, which owns the bank. The CWS is attempting to turn itself into an "ethical retailer", starting with a campaign to promote more honest labelling on products and a move away from intensive farming methods.
Simon Williams, head of marketing at the bank, says: "Ethical consumerism is growing. There is greater scrutiny of corporations and an expectation that corporations should have values." A survey earlier this year showed that the bank's customers are deeply committed to its ethical approach to commerce - 86 per cent believed that businesses have obligations beyond just making money and should be in partnership with customers and staff.
The bank has, however, cut its own staff, although this has been achieved without any
compulsory redundancies. It closed 15 branches and opened 15 new ones, some fully automatic. The bank has just 400 bank branches (compared with the thousands still operated by the traditional big four) and 250 of them are within Co-op stores. Customers can also use 14,000 Link and NatWest cash machines free of charge, and they can withdraw money from Co-op shops using their debit cards. But the Co-op concentrates on telephone banking, which is available to all customers as part of their basic banking service.
The Co-op Bank, wholly owned by CWS, is not itself a mutual body, so there is no possibility of customers receiving a windfall bonus should the bank be sold. But it is a part-owner of Unity Trust, the trade union bank that hopes to manage a new generation of "credit unions" being formed by trade unions. These offer low-cost loans to members.
The Co-op plans to associate the bank's name with good causes with which potential customers can identify. This began with newspaper advertisements coinciding with publication of the Scott Report, alleging that rival banks had financed arms purchases on both sides in the Gulf War. With the RSPB, it has launched a campaign to protect endangered species.
This is the first in a new series looking at the expanding area of ethical finance. Next week we will be looking at credit unions.
- 1 Hells of residence: Inside Macedonia's horrifying student accommodation - where the walls are green and the food is black
- 2 Rachel Canning: US teenager returns home after she tried to sue her parents for child support
- 3 Girl found in the Amazon rainforest with neighbour Grover Morales after going missing for 7 months
- 4 Rampaging elephant smashes up house but then 'saves crying baby trapped under debris'
- 5 Disney's Frozen is 'very evil' gay propaganda, says Christian pastor
Katie Hopkins continues campaign to become Britain's most hated talking head with poorly timed Bob Crow tweet
No EU referendum under Labour: Ed Miliband to reveal that vote on membership is ‘unlikely’ in next Parliament if party wins power
Grace Dent: Who cares if she spells it Barraco Barner? Gemma Worrall is more employable than some bookish arts graduate
Fracking is turning the US into a bigger oil producer than Saudi Arabia
Ukraine crisis: Russia pledges to 'retaliate against sanctions' as Ukrainian president says Crimea vote will not be recognised
The quiet diplomat: Catherine Ashton - recognised and admired in all the world’s troubled countries, yet ridiculed at home
iJobs Money & Business
£32000 - £36000 per annum + generous benefits: Pro-Recruitment Group: * TAX * ...
£37000 - £40000 per annum + £20000 benefits package: Pro-Recruitment Group: **...
£55000 - £70000 per annum + benefits: Pro-Recruitment Group: In-House Corporat...
£80000 - £100000 per annum + benefits: Pro-Recruitment Group: In-House Opportu...
Day In a Page
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony
A charming four-bedroom Oxfordshire cottage with oak floors and chunky-beamed ceilings, £465,000
A beautiful one-bed flat in a sought-after portered block, with access to Norland Square communal gardens
A one-bedroom flat within a Sixties school conversion with high-spec design and open-plan kitchen, close to Lambeth North Tube, £435,000
A 17th century four-bedroom house, with open fireplaces, cellar and pool, £600,000
A three-bedroom, coach house with luxury open-plan living space and contemporary breakfast bar
A newly refurbished one-bedroom flat in the heart of Mayfair, close to Grosvenor Square
A charming four-bedroom house overlooking Burleigh Square Park, close to Thorpe Bay
A three-bedroom farmhouse with a large inglenook fireplace and exposed beams
A boutique mews house, set around a central courtyard, with three bedrooms and a private roof terrace
A four-bedroom farm-conversion with three bathrooms and two reception rooms
A two-bedroom detached house with ensuite bathrooms and a sun-drenched decked terrace, £750,000
A modern and spacious two-bedroom, penthouse flat with two bathrooms in a prestigious development
A beautifully renovated five-bedroom terrace with three reception rooms and a courtyard garden, £700,000
A four-bedroom period house which has been extended to provide almost 2,500sq ft of living space, £675,000
A pretty three-bedroom Georgian home with a 22ft drawing room and a master suite with a balcony, £525,000
A substanstial family home with five bedrooms and landscaped gardens in the much sought-after Branksome Park area
A well-presented three-bedroom house with front and rear gardens, close to White City station, £475,000
A handsome five-bedroom house in a sought-after location close to the city centre
A five-bedroom country home with valley views, equestrian stables and 27 acres of land, £725,000
A six-bedroom farm house with separate, detached cottages and 371 acres of land
A two-bedroom cottage with parquet floors, chunky beams and an open fireplace
A three-bedrrom flat with 2,733sq feet of living space, a beautiful private garden and 15 acres of communal grounds
A four-bedroom chalet bungalow with three bathrooms and a spacious garden, £525,000
A two-bedroom flat with an open plan kitchen and two balconies, close to Arsenal station
A Grade II-listed home with six bedrooms, secluded landscaped gardens and views across Hadley Green
A Grade II-listed mansion with two apartments and a cottage, near Gretna Green
A three-bedroom Grade II-listed mews house with vaulted ceilings and roof garden