Where's the competition?

We have been asking this question for some time now and the same old answer's keep popping up. It seems that the Telegraph's Jeremy Warner has also been investigating and for us his key finding are:


"Any bank failure is a failure too many, but an environment in which small banks occasionally go bust and have to fall back on deposit insurance is plainly preferable to one in which the whole economy is threatened by the abuses and recklessness of just one or two very large operators. And yet regulators set barriers to entry so high that genuine entrepreneurial and innovative endeavour becomes all but impossible.


A large part of the mischief lies in the payments system, which is run along the lines of an elaborate cartel and is extraordinarily difficult for any intruder to crack. Whether it is use of a credit card, the Bank Automated Clearing System (BACS), the Society for Worldwide Interbank Financial Telecommunication (Swift), or cheque, all transactions will at some stage come into contact with established payment systems, making it impossible for new forms of banking to bypass the often opaque charges and technologies of the incumbents.

By these methods is the banking oligopoly sustained. There is no particular conspiracy against the public; it’s just the way the system works. And it touches all forms of banking. An IPO on Wall Street, for instance, is never going to cost less than 5pc to 6pc of the sum raised, despite apparently cut-throat competition for the business."

Read the whole article here

Where’s the current account?

For a number of years now we have recognized that new entrants to UK banking market have elected not to provision current accounts. That has seemed strange given that everyone needs one. Even more alarming as welfare reforms kick in those applying for the Universal Credit benefit will have to have a current account.


The Social Market Foundation have confirmed our concern in their recently published report “Branching Out: The evolution of retail banking “ .


From our research we know that access to the payments system is an important barrier to entry for our clients, restricting them from offering a complete banking service to their customers.


Tusmor is doing something about this last great barrier to entry so if you are interested please get in contact.


What would it take to start a really boring, simple bank

Here at Tusmor we often get asked his question. Having advised, built and launched new banks in the UK we have a lot to say on the matter. We are passionate about new banks and how we can help them overcome the bear traps that some new challengers have fallen into.


We hate to see enthusiasm dampened and spend a lot of time ensuring that the entrepreneurs who ask that question don’t get sent away with too many impossible things they need to achieve before they can make their dreams into reality.


Especially as the market for new banks with customer focused innovation is wide open in the UK.


So if you want to start a new bank please come and talk to us. Especially if what you really want to build is a “ bank that doesn’t suck “.


But maybe not until after you have sent an e mail like this one to your core team members :)


Have your say on Banking Standards review

Six months ago Sir Richard Lambert (pictured ) was asked to create an independent body that will promote high standards of competence and behavior across the UK banking industry. Although existing UK banks support the initiative, opinions are now welcome from as wide range as possible.


The consultation document can be downloaded here :


Consultation Paper

Tomlinson calls for greater banking competition

It has been confirmed that the FCA will liaise with Lawrence Tomlinson following his report into RBS and its handling of business in distress through its Global Restructuring Group.


During his recent evidence to the Treasury select committee , Tomlinson made repeated calls for greater banking competition to restore trusted banking services to the business community :


“Without competition in the banking sector, these scandals will continue to come to light and ever more business will be hurt in the process.  With RBS and Lloyds at the size they are at, smaller challenger banks will never be able to adequately compete to take their customers and drive true market forces.   It is vital that RBS and Lloyds are made significantly smaller, removing conflicts of interest within the bank, and creating a number of smaller, purely retail/commercial banks.”

Bank of Salford

Having lived in the area for 50 years, the passionate local Mayor of Salford, Ian Stewart, has told the BBC’s North West Tonight programme that he plans to set up a Bank of Salford as an alternative to loan sharks and payday loan companies.


Some would say a brave move but he is getting support from local people, our hero Dave Fishwick and from an unlikely source, The British Bankers Association.


The reporter on the show, local business consultant Jane Mccubbin , had this to say when asked about the Mayor “playing” with public money :


“The council say they will have to have all the same checks and balances as a normal bank, but with an annual budget of £234 million the bank could benefit from the interest instead of giving it to someone else,” Ending her piece with “ Who knows if it will get off the ground “.


Here at Tusmor we are seeing a lot of interest from local authority challenger banks – admittedly all in a very similar early stage of thought. Given were we are at the moment in the run up to the big game hunter banker bonus season we could do no better than to remember the old African parable :


“The narrative will always glorify the hunter until the lion learns to write “.


Here at Tusmor we have been teaching Lions to write for a number of years.

4 reasons why too-big-to-fail banking is wrong

A useful and important reminder of what the real issues are can be found in this short video clip from Novembers Finance Watch conference.


Featuring Sheila Bair, Chair, Systematic Risk Council and former Chair FDIC.

Is money getting to the right places- evidence that regional banks could fill the gap ?

Information released today by The Council for Mortgage lenders indicates a North-South divide with regard to mortgage provision.


The situation is less clear from information collated by the BBA. Commenting BBA Chief Executive Anthony Browne said:


“This publication shows the amounts that households and businesses are borrowing in the vast majority of postcode sectors across Britain. It is a move that makes the British financial services industry significantly more transparent. “


The increase in transparency is to be applauded. Tusmor plans to support its customers by enabling a level of transparency that has to date been hidden from view. What is evident is there is a large section of the UK population that is not featured in any of the reports out today .The devil will in the detail, and we look forward to a detailed review of the information published today.


Others have shown the way by starting with the data. This is the start of the UK understanding where we need to look for improvement.


17th December 2014

New Bank for Wales proposal secures business backing

Proposals for a Development Bank for Wales have been welcomed by business leaders and politicians across Wales .


During the last ten months, UWE Bristol Professor Dylan Jones-Evans OBE has undertaken an extensive and detailed consultation through meetings with over 140 representatives of the banking sector, other financial institutions, the Welsh and UK Governments, intermediaries, academia and businesses.


Writing in his very informative blog , Dylan comments :


“Wales remains the poorest region of the United Kingdom and the future success of its economy will be determined by the ability of its businesses to become more competitive and innovative.


The creation of the Development Bank for Wales is the first step towards achieving this and the Welsh Government is urged to examine the feasibility of this approach urgently to ensure that a viable and coherent approach to supporting SMEs in Wales is put into place as quickly as possible.”

Europeans vote to separate retail banks from the Casino

Campaign group Finance Watch see overwhelming support for the separation of credit banks from trading activity. According to FW 98% of EU citizens who responded to the consultation are in favour of bank separation .

Account switching service a waste of money

So no surprise there then . OK its early doors but initial feedback and reports suggest that the payments council have spent a lot of money on a swicthing service that will not improve the publics attitude to account swicthing.In the abscence of real alternatives the cosy cartel contines to dominate.


Best summary on the situtation found here .

Regional Banking Forum meets in Westminster

The United Sates, Canada and the UK are unique in the world in not having a culture of publically supported banks according to Marc Armstrong from the Public Banking Institute. In the US that may well be changing as there are 23 applications from States looking to replicate the success of the Bank of North Dakota ( est. 1919 ) , following the collapse of the banking system and many US State finances since 2008.


So it was against that background that Tusmor were delighted to attend the recent regional banking forum held in Westminster. The morning event came with great support from bank competition supporter Guy Opperman MP, newly appointed financial secretary to HM Treasury, Sajid Javid ( pictured ) and Bank of England representative Sam Woods.


Tusmor are currently working with a number of new initiatives looking at community and regional banking in the UK.


Fiona Brownsell, Tusmor CEO commented “ Its thrilling to see the level of support for new banks that we are now getting .In the last six months we have seen senior politicians joining with us to set the right environment for new bank entrants. We are beginning to see new bank business models emerging, bringing potentially exciting innovation to the UK customer .The hope is that one day the money spent on the account switching process will be worthwhile as we bring new banks online “.

Hedge Funds To Play Role in Co-Op Bank Shake-Up

And the shake up continues .

Co Op Bank removes support for local authorities

In a move that will send shivers through many local authority treasurers the Co Op bank announced last week that it intends to withdraw support for local authorities.


Most commentators see this as the start of major changes to still come at the beleaguered group.



Co Op Bank Latest News

Over the last few months we have seen growing concern as the truth about the collapse of the Cooperative Bank has gradually come out. Peter Marks ,Barry Tootell ,and Reverend Flowers have all given evidence and commentators have picked through the pieces . There is a resolution in place which current senior management defend as having been achieved without government bailout. Amen!


We will have to wait until Spring 2014 to hear what actually happened as the independent review is gathering its evidence.


The impact on the ethical banking community and those who believe in mutuality is still to be decided. Typical comments are that “Our mutual friends have lost the plot ... let's find out why “ .


Meanwhile Tusmor continues to be encouraged by the support we are getting for our new banks, coming from corridors of power keen to see a more balanced banking system .

Local Authority Banks and Banking

In the aftermath of the Icelandic bank crash the think tank NLGN found overwhelming support from senior council Finance Directors for the creation of a Local Authority Mutual Fund run as an independent company.


Two years later, the same organization argued that local authorities should be in the vanguard of policy responses to the credit crunch, rather than merely waiting for central government to act alone.


As the fallout from the Co Op banking crisis continues there was an element of déjà vu at last weeks annual Local Government Association conference in Manchester, where the Move Your Money organization published their excellent “ Local Authority Guide to Banking for Social Good “, supported by the CCLA.


A very compelling argument is made that:


“There is no better time to take a good look at your council’s banking. The Parliamentary Commission on Banking Standards released its landmark report on 19th June 2013,calling for sweeping reforms, including changes that affect local authority banking “

Laura Willoughby MBE, CEO, Move Your Money


Why is this so important? The size of local authority investment is significant with an estimated £31billion going into banks and money market funds, not to mention a public sector pension fund of some £180 billion.


Drawing on extensive research from NEF, it is estimated that money invested in the too big to fail banks returns a miserable 36pence for every £1 invested. Compare that to money invested via local stakeholder banks delivering benefit to the local community of £1.76.


This local multiplier effect, with its superior return on investment for local communities, is behind a new movement for local authorities to seriously examine building and running their own banks.


National policy changes are now actively encouraging challenger banks, Cometh the Hour, Cometh the Local Authority!


It’s time to join Councillor Richard Kemp’s call to create a Bank of Liverpool .

Tusmor in the news.


We are very excited to be ranked in this Guardian article. The road we have travelled has been long and at times it has felt like an impossible vision but with the changes in the political and regulatory environments real change is coming at last.


New banks are on the horizon and we are doing everything we can to help them along.


These banks are not like any bank you ever heard of in the UK. These banks want to serve customers with local, regional and specialist services designed for real people by real people.


It won't be overnight but we are confident that 2014 will be the year when banking in the UK changes for the better.

Next steps in the painful downfall of the Co-op Bank

Businesses and Bond Holders impacted

Bond Holders and Businesses now being impacted by the troubles of the Co-operative Bank according to This Is Money.


If even our favourite mutual can become caught up the hubris of growth at any price surely it is time for some limitation on the scale of retail banks.



And the troubles at the Co-op just keep coming

This time it's massive IT spending with no outcome

In March the Co-operative Bank admitted it had to write off £150 million ($229 million) of a planned £250 million ($382 million) new banking platform, which had to be junked.


In March, the Co-operative Bank said it is also having to account for an investment of £45 million ($69 million) relating to the Finacle computer software implementation project, which was commissioned and now has to be amortized over a period of 10 years.


Management stalled work on the Finacle system intending to move onto software from the planned Lloyds aquisition. They planned to reverse engineer their existing customers on to the proven Lloyds IT platform, which would be run for the planned enlarged Co-operative Banking Group "under commercial market terms."


In summary:


One failed implementation £250M

One stalled implementation £45M

One failed aquisition £??


and Co-operative and Britianna customers still being serviced on the original clunky old platforms. OUCH!!!!!


Stewardship not Hubris is what the UK needs from its banks

Tusmor at Transforming Finance on Friday 10th May

Tusmor announced they are starting theincubation of at least 4 new local, regional and specialist banks. The Information Daily interviewed Fiona Brownsell about the more philosophical aspects of how these new banks want to engage in the world of people and their money. 


There are many buzzwords around banking and Fiona added a new and very important one.




Currently banks view themselves as 'owners' of their customers money rather than providing valuable services to their customers. Therefore the bigger the deposits and loans in a bank, the more important the bankers themselves are. That is what the current hubris is all about.


The new banks, which should be opening their doors in approximately 1 year (rather than the previously experienced 2 to 2.5 years) are all about stewardship.


A new age of banking is beginning!


Guardian says the Co-op problem is down to hubris

So the smallest of our big banks is in trouble because it wanted to play in the big league. In just a couple of weeks we have learned:

  1. It pulled out of the deal with Lloyds which would have made it three times bigger in terms of branch numbers
  2. Moody's downgraded it to JUNK status
  3. It has been allowed to reduce its capital ratio from 9.6% to 8.8%
  4. Its publicly traded bonds plunged by at least 20% on Fiday after the announcement that Barry Tootell had resigned effective immediately
  5. Its profits had plunged to a £600m loss
  6. Its initial growth from 109 branches to 340, fuelled by the purchase of Britannia's 245 branches, was never fully integrated even after 4 years!

Hubris indeed! See the Guardian's story here


We think it's all about becoming big enough to ensure implicit government subsidies worth billions so the bankers at the top can become immune from regulatory pressure and along the way personally become multi-millionaires.


Bankers used to have status and position as stewards of our money, they used to be respected by business and consumers alike.


We say it's time to build the new model of hundreds of respected and respectable local, regional and specialist banks and we are doing something about it!

This is what a Canadian Credit Union looks like....

Interesting insight into the different views on how to treat customers. In Canada a Credit Union branch has comfortable seats and restful music and coffee. Whereas in the UK about 10% of Royal Bank of Scotland's UK branches are likely to be axed, with the institution considering any closure of the last bank in town on "individual merits", Ross McEwan, CEO of RBS UK Retail Banking Division said.


Here is what good can look like

More bad news for competition in banking. Time for a seismic re-structure?

Mark Carney and the Treasury Select Committee

Given all the noise in the press last week we thought you'd like to watch the actual meeting between the new Governor and the Treasury Select Committee.

Regulator Steps Up the Misselling Penalty

In another sea change the FCA announces that banks cannot hide behind 'caveat emptor'. This can only be good news for all the consumers and small businesses that have been stung in the recent scandals. 

Bournemouth is changing the Future of Banking

Local government must act as an "engine house" and "the driver for growth investment and recovery" said Liz Wilkinson, Head of Finance for Bournemouth Borough Council at ECOBATE.

Local Authorities can change the Future of Banking


Tusmor CEO Fiona Brownsell, recently presented at the ECOBATE2013 .The conference theme wasThe Future of Banking in UK and  there are a series of articles and videos from various sessions held throughout the day.


Fiona’s presentation outlined the role that local authorities can play in the roll out this year of the government’s welfare reforms and in particular how Tusmor solutions can help Universal Credit claimants deal with the problems of managing money as we move to a digital, cashless world.


FSA and Treasury Announce Game Changers

The new way of working will be introduced in full when the Financial Conduct Authority and Prudential Regulation Authority take over from the FSA on 1 April 2013.

The FCA and PRA today publish their proposals for leveling the playing field for new entrants.


They have addressed all the issues around the Authorisation Process and the Capital and Liquidity requirements and have truly signaled that



Over the next few days we will be following up with in depth analysis of the key changes and what they mean but we wanted to share right now so you can start your own research.


The press release is here:




and the substance is here:



We’d also like to express personally our grateful thanks to all those involved both in highlighting issues to us and those in the FSA, Treasury, BIS, Commission on Banking Standards who were open to listen and then be proactive about change.


At Tusmor it feels like all our Christmases have come at once! The turkeys didn’t get a vote!

The Treasury today publish their proposals for a competition focused payments regulator with real power to level the playing field for new entrants.



The press release is here:




Government Business Bank Announced

Tusmor supports the Government’s intention to set up a Business Bank and the bold timetable that suggests it will be fully operational before the next election. In a forward to the recently released March 2013 Business Bank Strategy update, business secretary Vince Cable wrote:


The business bank is not just a response to the deep structural downturn the UK faces originating from the severe crisis in the banking system and the subsequent tightening of credit conditions for SMEs. It is a core part of a new Industrial Strategy, the essence of which is long-term support for long-term investment and growth in the UK. It is also into the Government’s ambitions to promote diversity and competition in the business finance markets. The UK is now the only G8 country without an institution of this type and it is simply not acceptable for us to fall behind our competitors in this way.


The business bank will not directly lend to or invest in businesses nor use taxpayers’ funds to prop-up businesses with little chance of success. It will work with the private sector to support and increase the capacity of current channels of finance, rather than simply replace private sector provision.


The full report can be viewed here:



Welsh Government Report on Credit Unions

A newly released Welsh Government report exposes tensions in the run up to the introduction of Welfare Reforms. The report notes that feedback from credit unions suggests that:


“The current funding structure and a focus on delivering services to financially excluded groups, will not necessarily lead to the formation of financially sustainable organizations. Indeed, several credit unions suggested that “battening down the hatches “ and seeking to serve a core market of more reliable savers, was significantly more likely to lead to financial sustainability than the current Welsh Government-led strategy of seeking to expand services to financially excluded groups.”


This is an unresolved conflict in other parts of the UK and highlighted in Tusmor’s Elephants in the Kitchen series of articles. Resolving these tensions is something Tusmor is actively solving.


The full report can be downloaded from here :



HM Opposition call for New Banks


In the run up to this years Budget there are a number of solutions being proposed that might help to kick start the economy. Some have even been called radical .


Set against the background of the spluttering  Funding for Lending scheme is the call for new bank entrants to get involved with the initiative .


In addition the interest in creating a smaller regional bank network, so successful in the German economy, seems to be gathering cross party support with today’s announcement from Ed Miliband, Leader of the Opposition .


Tusmor aims to help the growing new bank sector by applying our unique experience to help them launch and grow with the very best technology and strategy to succeed.


Chancellor wants to remove barriers to entry


Perhaps we are getting over-excited but we definitely heard the Chancellor talk about changing the structure of the UK Payments Systems........

The Chancellor supports removing barriers to entry and enabling competition

Bank Accounts for Universal Credit recipients not fit for purpose

Universal Credit is to be applauded but not the lack of suitable bank accounts says Fiona Brownsell of Tusmor . She is calling for a new type of bank account and explains why it matters in this article :