Helping Small Scale Savers

Banking has a long and varied history, whether it is banking in ancient Rome, merchant banking in renaissance Italy or more modern retail banking (accepting deposits, money lending, exchanges and transferring funds). However, early banking was not readily available for the everyday working person or the poor. 

The idea of a ‘savings bank’ with the primary purpose of accepting savings deposits which could be used by everyone is historically a recent development.  The first European savings banks originated in the very late 18^th century (with the first in Germany) but they mostly proliferated in the 19^th century.

A subset of the savings bank is the ‘penny bank’, which was a way for poor and working people to be able to save money. At a time when savings banks often required an initial deposit that was too high for many ordinary working people, penny banks enabled and encouraged small deposits to help establish habits of saving and thrift.

The first penny bank was set up in Greenock, Scotland, in 1847. Most savings banks required a minimum deposit of £1. Penny banks, however, allowed customers to deposit as little as one penny. And in some cases, once they had saved a pound, an account would be opened at the parent savings bank. The idea quickly caught on, and penny banks were established up and down the country, in Sunday schools, schools, mechanics’ institutes, and social clubs. It was reported that by 1867 there were 874 penny banks in the United Kingdom with around £60,000 in total deposits.

The first penny banks in the then colonies of Australia were established at Unley in South Australia (1858), Dalby in Queensland (1859), Liverpool in New South Wales (1859), Geelong in Victoria (1862) and Launceston in Tasmania (1862). Other examples included Kiama Penny Bank (started 1862) and St Leonards Penny Bank (started 1864). The Fortitude Valley Penny Savings Bank (started in 1886) was associated with the Brunswick Street Primitive Methodist Church and when it eventually closed in 1993 it was one of the longest running penny savings banks in Australia. 

Another example is the Cairns Penny Bank, which started in April 1899 as the Cairns Weekly Penny Savings Bank. Impressively, the bank is still operating today and is known as Cairns Bank.

Later the term ‘penny bank’ was associated with school children and teaching regular savings habits. For example, in 1907 the Savings Bank of South Australia established the Penny Bank Department to take deposits of as little as one penny from children. These types of savings accounts quickly became popular.