As has been said in a previous chapter, the early
Scottish banks provided a very narrow range of services for their
customers. As the 19th century progressed, however, this range increased
markedly but it has been in the 20th century, particularly in the
post-Second World War period that the greatest strides forward have been
In the very early days of banking most customers
appear to have been personal account customers although the distinction
between personal accounts and business accounts was by no means so clear
then as it is now. As the industrial revolution progressed in the late
18th century and early 19th century the balance of business conducted by
the banks shifted very firmly towards the business sector and this is
reflected clearly in the types of service which evolved. In particular
the tremendous growth of overseas trade after 1830 led the banks to
develop the extensive range of services and settlement mechanisms
required by the exporter and importer.
Other new services reflect the increasing
sophistication of banking such as in the provision of computer services
for customers or the increasing willingness of bankers to be flexible in
developing new lending techniques (e.g., factoring).
Perhaps the most extensive changes in the 20th
century, however, have come in the post-Second World War years in the
sphere of personal services.
There were a number of reasons behind these
developments but the principal one amongst these was the desire for
growth. In the 1950s Government economic policy restricted the ability
of the banks to expand their lending and some of them turned their
thoughts to how they could grow within the confines of Government
policy. The solution was found by the Commercial Bank of Scotland which
led the way into the purchase of hire purchase companies in 1954. Other
British banks soon followed this example although most banks continued
to operate their hire purchase companies as subsidiaries rather than
integrate them with the parent bank.
The expansion of services was also motivated by
growing competition for deposits from other deposit takers such as
building societies and national savings; and also by the realisation
that only about 16 per cent of the adult population had an account in a
commercial bank in 1965. Many more had accounts in the savings banks but
there remained a substantial proportion of the population who were
In an attempt to attract these customers into the
branches to open accounts the offices themselves were made more
attractive and the range of services was greatly expanded to include
trustee, taxation, investment and insurance services.
Among the more significant of the new services which
were introduced in the 1960s and 1970s were cheque cards and credit
cards. The former were introduced in 1965 and 1966 by a number of
Scottish and English banks some of whom acted in concert to produce a
standard card which was recognised in all branches of all participating
banks and served to guarantee payment of any cheque whether for cash or
goods up to a maximum of £30, since raised to £50. This card
subsequently became acceptable in many European countries.
The first credit card introduced to Britain was
Barclaycard in 1966 in co-operation with Bank Americard and available in
Scotland through the British Linen Bank (later Bank of Scotland). This
was followed in 1972 by the Access Card scheme in which the Clydesdale
Bank and Royal Bank participated. The Visa Card (previously Barclaycard)
is now available as Trustcard from the T.S.Bs and as Bank of Scotland
These schemes captured the public imagination and
brought a great deal of new business to the banks as well as expanding
the banking habit.
Such was the proliferation of services that when the
Scottish banks gave evidence to the Parliamentary Committee to Review
the Functioning of Financial Institutions in 1977 they were able to list
no less than ninety-two services which they offered to corporate and
personal customers (see Appendix A).