The Charity of Dave – why banks need not fear entrepreneurs

The Bank of Dave, formally known as Burnley Savings and Loans , made waves when it featured on a prime time Channel 4 documentary (although let's face it, who hasn't?). Since then the little lender that could has, according to its founder Dave Fishwick, turned down a buy-out offer from a well known high street bank and renewed its pledge to revolutionise the banking system. Billy Bambrough looks at why the bank isn't going to compete on a large scale

The Charity of Dave - why banks need not fear entrepreneurs

The Bank of Dave, formally known as Burnley Savings and Loans , made waves when it featured on a prime time Channel 4 documentary (although let’s face it, who hasn’t?). Since then the little lender that could has, according to its founder Dave Fishwick, turned down a buy-out offer from a well known high street bank and renewed its pledge to revolutionise the banking system. Billy Bambrough looks at why the bank isn’t going to compete on a large scale

  1. The Bank of Dave is not trying to compete with the banks. At the first of The Great Business Leaders’ Forums, van salesman turned banker Dave Fishwick gave an inspirational speech on the failings of the UK banks, the evils that banking as a business has done to society, and how didn’t things used to be better in the good old days of banking? Fishwick is keen to avoid is becoming anything like the banks he is standing against.
  2. Expansion and profits are off the table. Fishwick isn’t trying to run Burnley Savings and Loans as a business. It is far more like a charity, giving away any profit left over after salaries and overheads. While this is fine for the residents of Burnley, this approach means only a very few people will ever be able to use the service. From the banks website: “Any profits received, after the overheads are paid WILL BE DONATED TO CHARITY! At Burnley Savings and Loans we do not do big bonuses.”
  3. The Bank of Dave has little interest in using technology to cut costs sand make services more widely available. In an interview with RBI Fishwick says that lending is not suited to digital and to make a decision on whether a business is viable a lender needs to meet with them face to face. This is opposed to the direction both business and personal loans seem to be moving with direct channels gaining traction and Square recently announcing it is to use it vast data on businesses it works with to grant instant loans on demand.
  4. Fishwick, while unconcerned with expansion, wants to see similar grass roots lenders start up in other areas of the country. These, he argues, will be equally unconcerned with profit and happy to actively try and avoid increasing revenue and profit. Despite his proven business acumen Fishwick claims this model is viable without extensive government intervention and regulation.
  5. The Bank of Dave’s customers are predominantly trying to avoid traditional banking options. Whether this is due to previously being turned away or just a preference for the alternative, these customers are all on the fringe of the banking market. While Burnley Savings and Loans reports that it has more depositors than it can currently deal with the explaination of how safe people’s money is will be not enough to convince a vast majority. Again from the banks website: “How safe is my money? The principal of all loans are personally guaranteed by David Fishwick so if your borrower defaults BS&L can recover from the borrower but David will personally ensure you get your money back.”

The work that The Bank of Dave is doing is commendable, no question. Whether big banks need to be concerned that this model is going to unseat them is another matter. From a marketing perspective acquiring the fledgling bank would be a boon (and fit very well with TSB’s ‘Local banking’ message perhaps) but would bring little of interest to every banks’ primary concern – the balance sheet.