How data disclosure can unlock access to finance
A new animation demonstrates how disclosure of bank lending data should unlock access to finance for businesses and families in the UK - having helped lever over $2 trillion in the USA.
The potential impact is demonstrated in the three minute film, launched by the Community Investment Coalition this week.
The animation, available to view here explains how millions of families and businesses cannot access fair and affordable financial services in the UK - putting families at the mercy of high cost lenders, and hampering many businesses from growing or creating new jobs.
But special types of lenders, called responsible finance providers, specialise in meeting the needs of low income families and small businesses. In 2015 they lent £251m to 57,800 customers, creating 10,000 new businesses and supporting 25000 new jobs. By working to fill the gaps in mainstream lenders' provision they can support even more customers.
Jennifer Tankard, chief executive of Responsible Finance (a member of the Community Investment Coalition) said:
"We've created the animation as a succinct explanation of how disclosure of bank lending data can have a positive impact. Millions of families and businesses cannot access fair and affordable financial services. Responsible Finance providers play a critical role in supporting them - and reinvest their profits to help more people and businesses access the finance they need.
"Disclosure of lending data from the big banks and mortgage lenders can help responsible finance organisations, by giving them the information they need to identify the gaps in bank provision. It can help them to focus on the local communities and businesses that are not having their needs met."
The animation demonstrates how, since its introduction in the USA in 1977, disclosure of bank lending data through the Community Reinvestment Act (CRA) has created partnerships that have levered over $2 trillion in safe lending to help communities create jobs, own homes, build financial skills and access affordable credit. CRA makes banks demonstrate that they are meeting the needs of low income communities.
In 2013 the British Bankers Association and the Council of Mortgage Lenders started to publish area based lending data from the big banks and mortgage lenders. This data is updated quarterly to a postcode level.
Jennifer Tankard continues, "analysis tends to show there's less lending in poorer communities. Our new animation encourages people and businesses to access the data and learn more about where the big banks and mortgage lenders are lending - and aren't.
"Over time, this data disclosure should play a valuable role in improving access to affordable finance and appropriate financial products in low income communities, like it has in the USA."
The animation is available here.
The animation was created by Hampshire-based film and video production company, Millstream Productions. Their director, Ben Cloud, said "We love working on projects that make a difference to people’s lives and so when approached by the Community Investment Coalition, we were excited to help them communicate their message. We chose a style of animation that enables us to convey the content in a digestible way yet still allows for feeling and emotion to come from the video’s characters. We’re proud to have supported CIC in their campaign for fairer finance and wish them success going forwards."