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.
And the need is significant. 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. The work of responsible finance providers, in providing access to appropriate credit, encouraging people to save and providing access to money management advice is crucial in tackling financial exclusion.
So how could responsible finance providers improve their reach, to have even more impact than they do now? Working in partnership seems an obvious answer. There is considerable evidence in a range of sectors that partnership working can help to increase organisational efficiency increase the customer base and improve the customer experience.
Our recent research ‘Tackling Financial Exclusion Through Local Finance Partnerships’ shows how good partnership working can make a difference. With case studies from Scotcash, Sheffield Money and Headrow Money Line, it sets out the key ingredients to ensure partnerships work well and have impact.
But barriers do exist which makes building local partnerships harder than it should be. Our report sets out some key recommendations which, if implemented, could make partnership working much easier.
- Fully understanding the benefits to consumers and organisations of partnership working and making sure these are key drivers behind the partnership
- Encouraging key local stakeholders, such as local authorities and trade bodies to provide leadership for the partnership, while also facilitating progress and tackling cultural resistance to change
- The need for regulators to support partnerships by using proportionate regulation to enable innovation and collaboration
Helping people to become financial included can make a critical difference to the quality of their lives with real benefits to the economy. It helps people to enter and stay in work and build financial resilience. Responsible finance providers already make a significant impact thousands of people’s lives by supporting financial inclusion. Partnership working could ensure they help many more.