At the start of the New Year, nine major UK banks have launched fee-free basic accounts targeted at the country’s unbanked or underbanked population. The move follows a deal between the government and retail banking industry that promises up to nine million consumers an account without potential financial pitfalls like overdraft fees.
The accounts which are effectively the same across all banks will include other basic payment and banking services like access to in-branch advice and service, (and at the Post Office) and the ability to use the bank’s entire ATM network for free. Commenting on the launch, Economic Secretary Harriett Baldwin said,
“Making sure that everyone in Britain has access to basic banking and financial services is at the heart of our long term plan. This is a key step forward in ensuring that our banking industry works for everyone.”
While the UK may not have as large unbanked and underbanked populations compared to those in developing and developed countries, including the United States. The fact that up to 9 million customers could be brought in by the new basic accounts highlights the need for the retail banking industry and payments industry more broadly to devout resources to addressing the unbanked and unbanked issue as it can only stand to benefit all parties as the country increasingly migrates to electronic payments.
Overview by Tristan Hugo-Webb, Associate Director, Global Payments Advisory Service at Mercator Advisory Group
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