Opinion: Back to the future bank

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It started out as a novel loyalty card scheme that helped people to save a little of what they spend.

Now Alex Letts’ Sheffield-based brainchild Ffrees is rapidly developing into a significant and ambitious financial institution.

The idea behind the Electric Works business is easy to grasp – a novelty in itself when dealing with financial issues.

“Ffrees targets the millions of families for whom saving is a distant dream. Customers can open a current account online for free and receive a Ffrees debit card. When they buy products and services from Ffrees partners, who include high street retails, they are rewarded with Ffrees Savings Points, paid as cash into a separate savings account.”

Every time the card holder spends money, the retailer transfers an amount into a savings plan, allowing them to build up Ffrees credits which can later be converted into money.

Since its launch, Ffrees has gone on to acquire one of the country’s leading concessions website for the over 50s and secured a £1 million investment from Finance Yorkshire.

Now it has raised an additional £2 million from high profile investors who are so convinced of Ffrees potential that the funding bid was significantly oversubscribed.

Alex Letts’ belief that today’s high street banks aren’t relevant to millions of everyday families will strike a chord with many people. His novel and transparent initial offering is to be applauded – although you have to admit that, in order to use Ffrees you need a bank account from which to transfer the money. However, with some of the services being bolted on to Ffrees, you have to wonder whether that will always be the case.

Latest innovations include a free ‘Money Manager’ which lets customers create separate ‘envelopes’ into which they put money for regular bills.

It’s a bit of a ‘back to the future’ scenario, reminiscent of the days when envelopes, labelled ‘rent,’ and ‘gas’ stuffed with cash were to be found on the mantelpiece of many homes. If the Ffrees model takes off, who knows, we could have a genuine alternative to challenge the practices of the jaded high street banks – and that would be no bad thing.