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.
05 September 2014 11:30 PM
30 August 2014 12:00 AM
30 August 2014 12:00 AM
The UK has slipped to 11th in the latest European league table of savers. Rob Griffin checks out the best options
22 August 2014 10:30 PM
Caroline Flint, the shadow energy secretary, says a Labour government would create a new energy regulator
22 August 2014 10:30 PM
16 August 2014 12:00 AM
16 August 2014 12:00 AM
08 August 2014 11:30 PM
- 1 Scottish independence: Ireland since 1919 is a lesson for Scotland in what a Yes vote means
- 2 Thailand deaths: Pair's bloodied bodies found naked on Koh Tao beach
- 3 Lego breaks out of the toy box and heads for the gallery
- 4 Julian Assange and Edward Snowden join piracy mogul Kim Dotcom’s political campaign in New Zealand
- 5 Daniele Watts: Django Unchained actress detained by Los Angeles police after being mistaken for a prostitute
Daniele Watts: Django Unchained actress detained by Los Angeles police after being mistaken for a prostitute
The political class is doing what Hitler couldn’t – destroying Britain
Scottish independence: Nationalist leader Jim Sillars threatens pro-union companies with 'day of reckoning' after independence
Scottish independence: Yes campaign feels the heat as Alex Salmond's NHS claims come under furious attack
£23m Birmingham cycle scheme is attacked by Tory councillor for not catering to the elderly
Salmond accused of laughing off national debt with ‘what are they going to do: invade?’ joke
iJobs Money & Business
£280 - £320 per day: Ashdown Group: The Ashdown Group have been engaged by a l...
£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...
£35000 - £38000 per annum + Benefits: Ashdown Group: Training Coordinator / Pl...
Data Governance Manager (Solvency II) – Contract – Up to £450 daily rate, 6 month (may go Permanent)
£400 - £450 Per Day: Clearwater People Solutions Ltd: We are currently looking...
Day In a Page
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
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