Community mutual bank for Wales is on track for launch this year

Minister Ken Skates says the community bank will help to tackle financial and digital exclusion

The Welsh government says work is continuing towards the regulatory approval of a community bank of Wales – which it is backing as part of its work to drive financial inclusion.

The mutual – being developed by Banc Cambia – will be member-owned and is set for launch this year.

In written statement, Ken Skates MS, minister for economy, transport and North Wales, said: “I am delighted to announce that in January, Welsh ministers, the Wales Pension Partnership and UK regulatory authorities were provided with a commercial investment proposal for the establishment and roll-out of Banc Cambria.”

“The proposal is currently being explored and subjected to rigorous due diligence processes by Welsh government officials and our independent external advisors. It is important that upon completion of the due diligence, and if appropriate, government and other potential investors move ahead in unison, subject to each party’s decision-making processes and regulatory approvals.”

Mr Skates said the the pandemic has added to the need for the new bank, which will be member-owned and run on mutual lines and serve customers in English and Welsh.

He said the Banc Cambria team had been working on the project long before Covid hit, “but the last 12 months have only increased the need and urgency for such a facility”.

“While it is clear that consumers’ banking habits are changing as physical branches are utilised by fewer customers, the ongoing decline in the number of bank branches and ATMs across Wales, provides consumers with significantly less choice and results in ever increasing travel times to their nearest branch.”

He pointed to the last month’s 2020 Financial Lives Survey from the Financial Conduct Authority (FCA), which he said “provides worrying insights on the underlying and additional impacts of Covid-19 on the challenges faced in the financial lives of people across Wales.

“The trends towards online and digital banking and moves towards a cashless society have been accelerated by Covid-19 – particularly as consumers are directed to cashless and contactless payment methods. The latter has seen an increase from £30 to £45, and now on to £100 per transaction in less than a year.”

This leaves people who are more cash reliant “increasingly becoming digitally and financially excluded, a situation likely to be particularly acute in rural areas where access to banking services are an essential but increasingly rare community service”.

In terms of access to a physical bank, building society or credit union branch by those with a long term health condition, Wales fare worst of the UK nations, added Mr Skates. “Such a lack of access, puts at risk the ability of many individuals, foundational economy businesses and communities to develop resilience, especially as we emerge into post pandemic recovery.”

“Owned by its members, taking account of local community needs, preventing capital drain, maintaining access to face-to-face banking and driven by customers’ needs, rather than profit maximisation – we believe that such a Bank can and will make a positive difference in communities right across Wales.”

He added: “Wales is leading the way but we have also learned from other, independent and emerging attempts to establish regional community banks in other parts the UK, a small number of which are now being practically supported through the Community Savings Bank Association (CSBA).”

Related: Preston Council agrees to join Liverpool and Wirral on regional mutual bank

For the last 18 months, Cambria Cydfuddiannol Limited (CCL) has been developing the Banc Cambria proposition, based on the CSBA ‘bank in a box’ model.

“There were several challenges that needed to be overcome,” said Mr Skates, “including costs and investment risk. It recommended that the development of a community bank should consider the impact on the credit union sector. This has been helpful support as the proposal for a bank has been explored.

“CCL has been creative in its approach and has adapted its strategy to establish a relationship with an existing financial institution. It is this combined approach that has allowed us to make faster progress in moving towards a new bank facility in Wales.”

CCL has also been working closely with one of Wales’ credit unions, Cambrian Credit Union, to consider how partnering opportunities can be developed to support more financially excluded individuals and avoid duplication.

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