In a rapidly changing technological landscape, banking practices of Parish and Town Councils are in flux. Traditional banking methods are being superseded by digital counterparts, offering greater flexibility, security and convenience. The trend of decline in the presence of high street banks in towns and villages underscores the urgency of this digital transition. However, how do councils choose the right online banking service for them? This post aims to guide you through the considerations and provide a review of the options available.

Advantages of Digital Banking over Traditional Banking

Digital banking carries several advantages over traditional banking:

• Accessibility: Access your account anytime, anywhere.
• Efficiency: Manage transactions and monitor accounts in real time.
• Security: Benefit from high security measures such as two-step verification.
• Cost-saving: Typically lower fees than traditional banking.
• Environmentally Friendly: Less paper waste.

The Decline of High Street Banks

The steady decrease in high street banks has been an ongoing trend. This has been particularly noticeable in towns and villages, leaving many councils without a local branch. This lack of physical banking options has posed challenges for councils in managing their finances conveniently. However, it also presents an opportunity to make a comprehensive transition towards digital banking, allowing councils to manage their accounts in a more accessible and efficient way.

What is Dual Authorisation?

In banking, dual authorisation is a security measure that requires two individuals to approve any outgoing payments. This additional layer of security helps to prevent fraudulent or erroneous transactions, making it a vital feature for Parish and Town Councils who handle public funds. It's essential to note that while some banks offer a 'two-signature' or dual authorisation system, not all support it electronically in a way that meets the needs of councils.

What to Think About When Choosing a Bank

Selecting a bank for a Parish or Town Council isn't just about who offers the lowest fees. Councils have unique requirements, such as the need for dual authorisation. Understanding these unique needs can guide councils to make informed choices about their banking services.

Review of Banks

This section reviews a selection of banks based on community feedback survey of several hundred local councils, offering an insight into their popularity among parish and town councils.

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1. Unity Trust Bank - ★★★★★

Percentage share: 23.60%

Unity Trust Bank offers robust online banking services that suit the needs of councils. The dual authorisation feature and strong customer support stand out.

💷 Costs - £6 per month.

👍 Positives

• They are very familiar with Parish, Town and Community councils and their banking needs
• Straightforward dual authorisation system
• The bank's customer service, ethical banking policy, and reliability receive high praise.
• Highly recommended by multiple users
• Hassle-free banking experience, including online banking with two-signer capabilities.
• The interest on funds is also reported to be better with Unity
• The deposit account offers some measure of protection and separation
• Unity Bank have taken onboard concerns and are re-launching being able to pay in cash at post offices

👎 Negatives

• Some users have noted that the interface can feel slightly outdated.
• It does charge a fee
• No interest is paid on current accounts

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2. Lloyds Bank - ★★★★☆

Percentage share: 20.06%

Lloyds is a well-established bank offering a range of online services suitable for councils.

💷 Costs - Free

👍 Positives

• Lloyds' familiar interface and comprehensive services are appreciated,
• Has a convenient facility to pay in cheques via the app
• Supports dual-authorisation

👎 Negatives

• Mixed reviews about their customer service, some users had negative experiences with Lloyds
• Changing mandates can be a pain.

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3. NatWest - ★★★☆☆

Percentage share: 12.80%

NatWest, part of the Royal Bank of Scotland group, is another high street name with a significant presence in the digital banking sector.

💷 Costs - Free for smaller councils (precept of only £5000), otherwise, £20 per month for Bankline (if you need dual-authorisation).

👍 Positives

• Users have noted good experiences with setting up accounts and managing transactions.
• Offers a free dual-authorisation option called Bankline for councils with a precept of only £5000.

👎 Negatives

• Dual-authorisation is expensive (Bankline)
• It appears there have been numerous issues with NatWest
• Some mention difficulties with customer service.
• Lack of two-signer electronic capabilities (without Bankline)
• Difficulties in marking off invoices in their system
• Insists on linking personal and business banking. This last point is a major security flaw, as it means a user logging on to their personal account sees the business account and vice-versa.

4. Barclays - ★★★☆☆

Percentage share: 13.38%

Barclays is a well-known bank offering comprehensive online banking services. Their Community Account might be attractive for councils.

💷 Costs - Free

👍 Positives

• Free
• Some councils found Barclays' digital platforms intuitive,
• Offers online banking with dual authorisation, Clerk sets up payments and a Councillor/signatory has to authorise it

👎 Negatives

• Experienced difficulties with customer service
• Experienced difficulties with the implementation of dual authorisation.
• Issues arise if a change of signatory is needed as there are no local branches to verify ID.

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5. Co-operative Bank - ★★★☆☆

Percentage share: 12.82%

Co-operative Bank provides a range of online banking services, including business accounts, with good online security measures.

💷 Costs - tbc

👍 Positives

• Users appreciate the ethical stance of the bank,

👎 Negatives

• Some found their online services less user-friendly compared to other options.

The remaining banks account for a smaller percentage of transactions among the councils surveyed, suggesting they may not be as popular or well-suited to the specific needs of parish and town councils. However, that's not to say they might not be the perfect fit for certain councils. As always, it's important to thoroughly review the services and terms of any bank before making a decision.

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Considerations beyond the Banks

Choosing a bank goes beyond comparing services and fees. Councils should also take into account these additional considerations:

• Digital Literacy: Is the council comfortable using online banking services? If not, the council might need to invest in digital literacy training for its members.
• Ability to Take Online Payments: An online banking system that allows the council to receive online payments can simplify transactions, making them more convenient for both the council and residents. It is also worth considering whether the bank offers an integrated online payment solution, which can streamline the reconciliation process.
• Community Involvement: Some councils might prefer banks that are involved in local community projects or provide special programmes for community development.

How to Switch Banks:

Switching banks may seem daunting, but it can be broken down into manageable steps:

1. Research and Compare: Look at what different banks offer and compare these offerings to your council's needs.
2. Open a New Account: Once you've selected a bank, open a new account with their online services.
3. Transfer Services and Funds: Begin the process of moving direct debits, standing orders and other regular transactions to your new bank. Transfer an initial amount to the new account but maintain some balance in the old one to cover any pending transactions.
4. Inform Key Parties: Notify your employees, service providers and other key parties about your new banking details.
5. Monitor the Accounts: Keep an eye on both the old and new account for a while to make sure all transactions are being correctly executed.
6. Close the Old Account: Once you're sure everything has been successfully transferred, close your old account. Request written confirmation for your records.

Conclusion

While many banks offer online banking and claim to support dual authorisation, it's essential to gather firsthand experiences from other councils to understand the nuances and potential challenges. Choosing the right bank for a Parish or Town Council is a careful balance of weighing up cost, convenience and suitability of services. Remember to consider the unique requirements of council banking, such as dual authorisation and integration with existing financial systems. With the right choice, digital banking can be a significant asset to efficient and transparent financial management within your council.

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