Successful partnerships are key to tackling financial exclusion
Responsible Finance report sets out a blueprint of collaboration between existing local finance organisations to help engage the 14% of the British population who currently face financial exclusion.
Greater collaboration between existing local finance organisations could transform the lives of the millions of Britons excluded from mainstream financial services, according to new research from Responsible Finance. Tackling Financial Exclusion Through Local Finance Partnerships sets out a blueprint for successful partnerships that could be replicated across the United Kingdom. This report provides a step by step approach to achieving the changes needed and is based on successful approaches in the USA.
Two million people do not have a bank account and nine million people do not have access to mainstream credit options. So at least 14% of the UK’s population faces financial exclusion. This impacts on their ability to participate in the economy and build financial resilience through savings, for example.
Tackling financial exclusion and strengthening the UK’s financial capability does not require new entrants to the market. Existing finance and advice organisations with a local focus could strategically engage with each other to achieve far greater scale.
Locally-based finance organisations, such as credit unions, responsible loan funds and debt and money advice charities, offer access to advice, savings and affordable credit. They collectively reach over 3 million consumers and businesses each year.
Jennifer Tankard, Chief Executive of Responsible Finance said:
“In 2016, responsible loan funds lent £20 million to 37,000 people and helped their customers deposit £3 million into savings accounts. Local finance organisations are innovative, responsive and resourceful but, at the moment, they don’t have the reach to provide services to everyone who needs them. By working in partnership with credit unions, advice organisations and other local stakeholders, responsible loan funds could help significantly more people. But this partnership working and expansion requires investment, changes to regulation and for organisations themselves to be open to working together.”
Sara Llewellin, Chief Executive, Barrow Cadbury Trust said:
“Drawing on lessons from the UK and the USA this report highlights what can be achieved by finance providers acting responsibly and in partnership with others to help. The premise of our Economic Justice programme is that financial institutions need to improve their products and services to include and build financial resilience in communities that are currently underserved.”
Tackling Financial Exclusion Through Local Finance Partnerships is available here. The research was based on interviews and focus groups with 22 finance providers and was kindly supported by The Barrow Cadbury Trust.
