Trains and banks

Both Stockholm and London had the same problem – too many people driving into the city to work, clogging up the road network for a few hours each day and tying up acres of space for car parks.  They both wanted people to switch to commuting by train, but how to achieve that?

In Sweden they improved the train service so that it was quick, cheap and reliable. As a result nobody in Stockholm drives in unless they really really need their car during the day.  Almost everybody else takes the train.

In London they did not improve the shockingly unreliable and expensive train service; they made driving in harder. Congestion Charging; Red Routes; Clamping and armies of Traffic Wardens to catch those trying to avoid the astronomically high car parking charges. And it didn’t work!  People still pay the ridiculous charges to travel into London in their car rather than squeezing onto an overcrowded train that is unlikely to reach its destination anywhere near the specified time; if it turns up at all.

I was reminded of this by the Bank of St Helena’s recent announcement that it may no longer process account transfers on the day they are presented.

Bank of St Helena has recently introduced features that could bring St Helena banking into the 21^st Century.  You can now bank online, and a trial is underway for a debit card scheme making cashless payment possible in shops and restaurants.  Which is fine, except that both of these new services are expensive and will be out of the reach of ordinary Saints trying to make ends meet with St Helena’s notoriously low wages and high prices.

Unable to afford the new services, most Saints will continue to queue up at the bank to draw out their salary in cash, and will continue to use account transfers in shops when the cash runs out or the queue at the bank is too long to contemplate.

The bank’s response to this sadly follows London’s, not Stockholm’s.  They have not made Internet and debit card usage cheaper, they have introduced new ‘rules’ to make using account transfers harder.  Firstly they will no longer promise to process them on the day they are presented, leading to confusion about when the funds will be debited from the account.  And secondly they have said that in some cases they will not issue a receipt for the transaction until the next day or later, and that they will expect the customer to come back to the bank to collect their receipt!  I’ve used banks the world over since 1976 and I have never heard of one where you had to go back the following day for your receipt!

Will this work?  Will this force ordinary Saints to use Internet banking and debit cards?  I predict it will not.  If people have so little money they are forced to compare prices in up to half a dozen shops to save 20p on a tin of beans, they do not have the option to pay for 21^st Century banking at the prices Bank of St Helena is charging.  So they will have to continue using cash and account transfers, however inconvenient the bank makes it.

The net effect of this new measure, I am sure, will not be more Internet banking and debit card customers – it will just be a lot more unhappy people!  And they can’t move their business to another bank because - as is so often the case in St Helena – there isn’t one.

I was the managing director of Bank of St Helena from 2005 to 2008.  I can honestly say that such a thing would never have happened in my day!