Girobank - Banking For The Masses

Banking For The Masses

By the late 1970s, one pound in every four pounds deposited in cash at a bank in the UK was deposited with the National Giro at the Post Office. This would later rise to one pound in every three. The organisation was again profitable and repaying its capital costs. Indeed, its rate of return on capital was higher than that of the commercial banks, and this allowed the government to relax the constraints it had placed on the National Giro and even allow for further capitalisation.

In 1978, National Giro renamed itself National Girobank to re-establish itself in the minds of the public as a bank, rather than some quasi non-bank. Its status as a bank had been fixed in law, but it had until now been reluctant to use the term. It also re-launched its ambition to be the People's Bank, and introduced completely free banking to UK personal customers. This included free postage for the remittance of documents to the Giro Centre as well as free cheques and deposits (the terms inpayments and outpayments were dropped).

The new campaign was a great success and at first the bank had trouble keeping up with the flow of new business it generated.

Later the bank dropped the word National from its title, simply being known as Girobank plc as a prelude to privatisation.

Although the bank gained a large number of new accounts it never reached the level of penetration achieved by the European Postgiros to enable it to become the main payment clearing system in the UK as was the dream of its creators. The main reasons are given in the next two sections.