Financial Fridays with Julie Pratten on Ethical Banking

Friday 10 April 2015

by Julie Pratten

Welcome to Financial Fridays, your bi-weekly helping of hot topics from the world of banking and finance; ideas for activities that can be used as warmers, fillers or full-blown lessons. This week’s feature is ethical banking. 

If you have any requests or questions about any particular aspect of banking and finance, we would love to hear from you, so please feel free to post them.

This Financial Friday features:

• BANKING BUZZ – No buzzwords this blog. Instead, as this issue coincides with the IATEFL Conference, I decided to profile a very special bank with heart here in Manchester.

• FINANCIAL FOCUS – ethical banking what it is & why we want more of it.

• BLUE CHIP LINKS – suggestions for further material on our featured topic.


FOCUS Ethical Banking

1 Lead in

What is ethical banking? Which banks would you consider to be ‘ethical’/ ‘unethical’? How can banks be made more responsible? Who should police the banks?

2 IATEFL Conference Special                                                                                                                    

Banking on Dave – Manchester bank with a heart                                                                                            

Read the text and discuss the questions that follow.

Burnley Savings and Loans Ltd, which opened its doors in 2011, is a bank with heart.  The company was created by David Fishwick, a local entrepreneur, business man, and the largest supplier of Minibuses in the UK. When the recession hit in late 2008, David discovered that many of his customers were struggling to obtain loans from their High Street Banks. These were loyal customers that he had done business with for many years, and had complete faith in. David decided that if the Banks refused to help ordinary people, then he would. Under the slogan “Bank on Dave!”, David applied for a banking license and obtained the necessary documentation required to issue loans. These loans ranged from small personal loans to finance for businesses.

Believing that High Street Banks treat people as credit scores and not as individuals, David decided to return to basics. As such, Burnley Savings and Loans Ltd do not credit score. Instead, they offer a much more personal approach to underwriting, dealing with customers on a case by case basis.

Once David had the credentials to provide loans, he prepared the groundwork for savings accounts. He immediately noticed what low interest rates customers were being offered on their savings. He decided that Burnley Savings and Loans Ltd should offer a highly competitive rate of interest and add value to customers’ savings.

With the support of a sound legal team, David created a unique type of loan and was able to offer 5%; this was in the form of a certificate for lenders and borrowers. At the same time, Burnley Savings and Loans Ltd offered the opportunity for people to participate in a scheme that not only benefits Burnley and the North West of England but the community across the country. This is because the money customers deposit with the bank is used to provide business and personal loans.

By offering affordable loans to people who have struggled to obtain finance from high street banks, through no fault of their own, as well as offering 5% AER on their savings. David has proved that the financial industry can also be socially responsible and any profits received, after overheads are paid, are donated to charity.

1 What do you think about this bank?

2 How did it start?

3 How does it differ from high street banks?

4 How does it help the community?

5 What other ethical banking corporations have you heard of?

3 Vocabulary focus – synonyms

Match the words below with similar words or expressions.

1 recipient

2 conventional

3 reciprocity

4 extortionate

5 tackle

A solve

B costly

C traditional

D receiver

E mutual exchange

4 Read & share  

Read your short text then share the information with a partner.

Find out the following:

what Transferwise is /who started the company

how many company it transfers to/ how it started

who started it/ where is has offices/ how it operates

the cost of transfers via TransferWise

Text A

TransferWise is a peer-to-peer money transfer service launched in 2011 by two Estonians Kristo Käärmann and Taavet Hinrikus. It now operates from its headquarters in London with offices in Tallinn, New York and Berlin. More than £3 billion has been transferred through TransferWise and it currently supports more than 300 currency routes globally. The company started after the personal experiences of Taavet Hinrikus, who was Skype‘s first employee, and financial consultant Kristo Käärmann. Both of them were working between the UK and Estonia and needed to transfer funds between the two countries. They were losing round 5 per cent of their money every time they did this and in order to tackle this problem they created TransferWise.

Text B

From the customer’s point of view, money transfers with TransferWise are not very different from conventional money transfers. First of all, the customer chooses a recipient and a currency, the money to be transferred is taken from his or her account and the transferring company charges for the service. Later, the recipient receives the payment in the currency required. The main difference is how TransferWise routes payment. Instead of transferring the sender’s money directly to the recipient, it is redirected to the recipient of an equivalent transfer going in the opposite direction. Hence, the recipient of the transfer receives a payment not from the sender initiating the transfer, but from the sender of the equivalent transfer. The clear advantage of this method is that the process avoids extortionate currency conversion charges and transfers crossing borders.

TransferWise charges only €1 or 0.5% an equivalent amount in the customer’s currency, whereas British banks may charge up to 5% when hidden fees are added. The high street banks also impose restrictions such as minimum transfer sums which make it difficult to transfer small amounts.

5 Review                                                                                                                                                   

Now complete this short summary using words and expressions from the texts. The first letter is given to help you.

TransferWise is a money t…………. service launched in 2011 by two Estonian businessmen.The firm has its h…………. in London and offices in Tallinn, New York and Berlin. TransferWise currently s…………. more than 300 currency routes worldwide. The company was established after its founders had difficulty sending payments, to t…………..the problem of e……………….international transfers. TransferWise’s payments are sent in a different way.  Funds are redirected to the r……………of an equivalent transfer in the opposite direction. The recipient receives payment from the s…………… of the equivalent transfer, not the sender who starts the transfer. This method means that customers avoid currency c…………. charges, r…………………. on minimum transaction amounts and h…………. fees.

6 Follow up

Find another interesting article on Ethical Banking. Share with your group on facebook or another social media platform. Give a one minute ‘elevator pitch’ presentation to your group in the next session.

Answer key: Ex 3: 1d, 2 c, 3 e 4 b, 5a; Ex 5: 1 transfer, 2 headquarters, 3 supports, 4 tackle, 5 extortionate, 6 recipient, 7 sender, 8 conversion, 9 restrictions, 10 hidden

Blue Chip links

Check out the following reading/listening material on the topic of ethical banking                         

Bank of Dave

Bloomsberg interview of the TransferWise team

Copyright Julie Pratten 2015
Copyright this edition Delta Publishing 2015



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