The local banking toolkit

A practical guide to starting a regional community bank

Our economy is severely unbalanced, with too many people missing out on the opportunity for a decent, productive and rewarding livelihood just because of where they live. Underpinning these imbalances is an overly concentrated and profit oriented banking system that is not fit for purpose. The structure of our banking system fundamentally reinforces the UK’s notoriously uneven economic landscape, and helps make it the least financially resilient of major advanced economies.

Nearly 10 years after a global financial crisis that came at an incalculable human cost, many are asking what finance is ultimately for? Who does it serve? And who should it serve? We urgently need a resilient financial system that serves the economy; that helps people to live decent, productive and rewarding lives.

As the New Economics Foundation (NEF) has argued, a key priority should therefore be to re-establish local sources of banking that aim to deliver a positive social impact as well as financial returns. By creating a network of local stakeholder banks that support investment opportunities and offer financial services to disenfranchised communities, we can start transforming our broken banking system into one that genuinely serves people.

With the potential to deliver an array of social and economic impacts to their local economies, a growing number of practitioners, local councils and research institutes are becoming increasingly interested in how to set up a regionally focused local bank. Responding to this interest, this toolkit aims to provide a practical guide to establishing a type of local stakeholder bank: a regional community bank.

In this toolkit, we cover:

  1. What we mean by a regional community bank and how it differs from other local stakeholder banks in the UK;
  2. The practical steps to establishing a regional community bank;
  3. Investment pathways for building a regional community bank, as capitalisation and investment pose a significant obstacle;
  4. Frequently asked questions regarding local banking. 

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