Terry Thomas, Lord Thomas of Macclesfield, who has died aged 80, brought vision, change and empathy into the dry world of the British bank, proclaiming that banking was too important to be left to bankers.

He joined the Co-operative Bank in 1973 and became its managing director in 1988, at which point he seized the reins decisively. Terry caught the mood of the bank’s ethically minded and often well-heeled customers. He democratised the gold card – making it available to a far wider range of customers and guaranteeing that it would be free for life.

The Co-operative Bank was already a member of two international networks of people’s banks, which gave it distinctive representation in Europe and the world. Terry added to that the international Social Venture Network in which he joined entrepreneurs such as Anita Roddick, founder of the Body Shop, who shared the vision of creating and managing a socially responsible business.

This led to his completing the differentiation of the Co-operative Bank from its old-fashioned rivals by launching the idea of an “ethical stance”. Terry took bold moves with sensible caution and made it clear from the beginning that the bank was adopting the positions of its customers, not giving them moral lessons.

The son of Mildred, who ran a greengrocery stall, and Emrys, a transport manager, Terry was born in Carmarthen, south-west Wales, and educated at the town’s Queen Elizabeth grammar school. He was inspired by his national service to go into a progressive career, in which he was supported by his future wife Lynda Stevens, a teacher. Even so he told Lynda when he joined National Provincial in 1962: “Don’t worry, I will get a proper job later.”

National Provincial merged into the National Westminster Bank in 1970. The decisive career step for Terry came the following year, when he was seconded to the Joint Credit Card Company in 1971 to create, on behalf of straggler banks, a competitor to Barclaycard. He was part of the team that chose Access as the name for the new brand, but by the time the credit card was launched, Terry had been appointed marketing manager at the Co-operative Bank – the first marketing manager of any British bank.

Terry introduced the first Co-operative Bank credit card and brought the marketing buzzword “free” into current accounts. Banks had been used to charging a small fee for each transaction, offset by a notional interest rate paid on the account balance, but free banking was a compelling proposition.

In January 1975 the Co-operative Bank introduced free current account banking as long as the customer maintained a positive balance. Although it was 11 years before any of the big banks followed the Co-operative’s lead, this remains the basis of current account banking today.

In 1984, he was seconded part-time to become the first managing director of Unity Trust, the financial institution established jointly by the Co-operative and leading trade unions to deter German and Israeli banks trying to attract the deposits of the UK trade unions. At Unity he brought the employee share ownership plan (esop) to Britain, following a fact-finding mission to the US.

Times have changed and nowadays what Terry did in banking terms might not so easily be seen as a good thing. The credit cards that made life easier for millions are now also seen as traps for the unwary; free banking is considered deceptive; ethical stances as a bold norm. When Terry introduced punitive charges for customers who overdrew without permission, it was accepted as a short sharp lesson – now it is considered unfair practice.

But in the 21st century, when commercial bankers have misbehaved to incredible degrees, popular faith in everyday banking and even in the bank manager of yore remains remarkably high. That is due in no small part to Terry. He was a lifelong supporter of the Labour party, so the Co-operative movement gave him a natural home. He was made a CBE in 1997, the year he retired from the bank; and received a peerage as Lord Thomas of Macclesfield later in the year, but a heart problem was to curtail a second career in politics.

His second great loyalty after Wales was to his adopted homeland in the north-west. He was the first chair of the East Manchester partnership, and played a part in the 2000 Olympic bid which prepared the way for Manchester’s successful bid to host the 2002 Commonwealth Games. In 1998 he was appointed the first chairman of the North West Development Agency.

He is survived by Lynda, whom he married in 1963, and their three sons.

• Terence James Thomas, Lord Thomas of Macclesfield, born 19 October 1937; died 1 July 2018