Building Consumer Confidence After The Bank Scandals

The negative news stories involving banks just keep on coming

. Recently a software glitch led to millions of customers' payments disappearing, leaving many NatWest, Royal Bank of Scotland and Ulster Bank customers in turmoil for over a week.

Now there's a huge row over alleged Libor fixing that looks set to run and run. Libor is the average interest rate that banks charge each other for loans, so manipulating Libor is considered scandalous. As the Right Honourable George Osborne, Chancellor of the Exchequer said, "These contracts may sound exotic, but they are the bread and butter of our financial system and are used by businesses and public authorities every day, and they affect the mortgage payments and loan rates of millions of families and hundreds of thousands of firms, large and small.

With a fine of 290m imposed by regulators and the resignation of both their chairman and chief executive, the scandals already proved costly to Barclays. Now the Serious Fraud Office is looking to see if criminal prosecutions should be brought. In fact, the chairman of the Financial Services Authority (FSA) was moved to say that the Barclays Libor scandal had dealt a "huge blow" to the banking industry's reputation, and demanded that banking should focus on the customers, not the profits. He's not the only one thinking this way.

Over in the USA, a campaign designed to get people who are concerned about ethical banking to move their money, has led to about ten million customers switching bank accounts. The campaign is also running in the UK, with up to four times as many people as usual showing an interest in moving banks since the RBS group's glitch.

It will be interesting to see how the big banks react to the public anger. Will they change their culture by becoming more transparent and by demonstrating that they are actually customer centric? Anyone looking to shift accounts will probably find that bank account alternatives such as the prepaid card makes a refreshing change. This is a great alternative to a high street bank account because it doesnt hit customers with the unexpected penalty fees that can make so-called 'free banking' so expensive.

Many companies behind these prepaid accounts have been delivering their customer-focused service to UK customers for years. A lot of them are separate from the cynical banking culture, and instead they consistently create innovative solutions to meet their customers' needs.

With customer focused cultures and transparent fee structures prepaid cards might not be just an alternative to banks they could be the future of retail banking.

by: zac colbert

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