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History
On 18th October 1968 Prime Minister Harold Wilson officially opened Girobank - 'the people's bank', or National Giro as it was first known. Part of a Labour Government initiative to provide banking facilities for those people who did not have bank accounts, it was the first bank in the world to be planned and built from its very beginning as a fully computerised unit. The process was overseen by the then Postmaster General, Tony Benn.
Much optimism surrounded the new company and the promotional booklet enthusiastically claimed that, 'Within one or two years the National Giro Centre will be handling the accounts of some 1,200,000 customers, including many large firms and organisations.' At that time there were 23,000 Post Offices in the UK and Girobank provided free banking and credit transfer facilities at each one for six days a week, thereby creating competition for the high street banks. Due to the fact that only 25% of adults had bank accounts the market was considered very penetrable. However, despite its extensive promotion Girobank secured only 110,000 accounts in its first six months and suffered further losses for the next seven years.
Many reasons were put forward as to why the National Giro had not been as successful as predicted. Competition by joint-stock banks and the development of competitive current accounts by other banks had been cited as plausible causes. However, the real issue appeared to be the miscalculation of the difference between the real and actual demands of the customers. Furthermore, the economic growth of the UK had been sluggish since the Second World War and consequently its rate of absorption of new services was painfully slow.
Girobank did, however, benefit greatly from a partnership with the Mercantile Loan Company Ltd. The partnership meant that Giro customers were eligible to apply for Mercantile credit loans and new applications for a Giro account soared as a result.
When the Conservative Government were voted into power in 1970, the future of Girobank looked distinctly shaky as a review of the activities of Girobank was commissioned. By this point Girobank's cumulative losses had reached over £19.7 million and although Giro was granted a reprieve, there was little doubt that it had been a very close call. On 17th November 1971, Christopher Chataway, the Minister for Posts and Telecommunications, declared that Giro should continue but that it must employ a new approach to its practices.
As part of the new approach many structural reforms were implemented during 1972. These included a review of the Tariff structure which doubled the majority of the existing charges and added a charge for debt transactions and later an overhaul of the Rents Scheme, the introduction of the Giro Gold Card, the streamlining of the business, a reduction of the labour force from 3500 to 3000 and a change in the standard 'same day' service to one of a 'next-day' service. The Giro also took on the Postal Order business and began using its International Services to replace the Post Office's own International Money Order Service.
In 1973 a report prepared by Coopers and Lybrand recommended that Giro should implement a formal business planning procedure and annual business plan. The advice was welcomed and the first business plan issued in 1973.
During 1986 postal operations were organised into three separate businesses - Royal Mail Letters, Royal Mail Parcels and Post Office Counters (in addition to National Girobank which remained a separate business unit). National Girobank became independent as a plc in 1988.
Despite the fact that Girobank had managed to overcome its shaky start and that it had grown rapidly to become Britain's sixth biggest bank, it never really shook off its down-market image and, in 1990 it was sold to the Alliance and Leicester Building Society.