Impressions of the Transforming Finance Conference

Impressions of the Transforming Finance Conference
Pauline Hinchion

The timely Transforming Finance Conference ( in London brought home the stark reality of the monoculture that is British Banking in comparison to the rest of the world.  Whereas in the UK only 3% of all banking is made up of local/state owned/co-operative and ethical banks; in the USA it is 34%; in Canada it is 15% and in Germany it is 67%. All of these banks engage in the ‘real economy’; that is, they provide loans to local companies and individuals who need them. Their business is significantly different from the ‘speculative economy’ that the Too Big to Fail(TBTF) banks engage in –  and which  the Conference made clear,  brought most of the western economies to their knees.  It cannot be a co-incidence that the German, US and Canadian economies are all doing better than in UK since the crash of 2007/08.  A ‘co-incidence’ that, the speaker from the German Savings Bank Association partially explained by the levels of investment that the local/state owned/co-operative and ethical banks are putting into their real economies.  In the UK the lack of banking diversity has resulted in the Bank of England pushing the TBTF banks to ‘oil the wheels’ of the ‘real economy’ with limited results.

The Conference had an impressive array of speakers from across Europe and the UK addressing the main question for the Conference – how to revitalise diversity in a UK banking sector that is so dominated by the big 5 banks?  

Presenters addressed issues of ethical investment and banking; new emerging forms of democratic banking such as Peer2Peer and Crowdfunding; the establishment of new banks and how the UK government is trying to lower the barriers for new entrants and the role which local state owned banks can play in stimulating local economies.

Scotland, like the rest of the UK, has been negatively  affected by the speculative banking of the Big 5 TBTF banks and there are many individuals and organisations in Scotland from across the political and economic spectrum who would like to see more diversity in the banking sector.   The work that Senscot is currently undertaking is all part of an ongoing discussion that is happening across the UK as it seeks the views of experts, potential clients and other interested parties on the establishment of a new Scottish social enterprise bank/trust that would be run by the social enterprise sector for the sector and will address its varied banking and investment needs across Scotland.

Although this sounds like a very big ask, we should remind ourselves of the role Scots historically played in the establishment of modern banking.   The first Savings Bank in the world was founded in Dumfries-shire; the Bank of Scotland was the first bank in Europe to print its own banknotes and it was a Scotsman who established the Bank of England.  As such it was great to hear the Airdrie Savings Bank specifically mentioned as a case study in Tony Greenham’s (NEF) conference presentation as a best practice model for the UK.

This conference highlighted a number of different ways forward for UK banking and finance, and more importantly gave real life examples of what is happening in other parts of the world, all of which gives added impetus to the opportunities to create a ‘socially useful’ banking sector.

See speech (video) given by Thierry Philipponat (Secretary General of Finance Watch)