Expanding the provision of affordable credit

Affordable credit delivered in a fair and responsible way can be a lifeline for people who are excluded from mainstream providers, helping them weather income shocks and spread the cost of essential items.

Responsible lenders like community finance providers and other purpose driven businesses do a great job in providing this type of credit – yet they lend ten times less than high cost lenders. We call this the 10x challenge and we’re working hard to even things up.

We’re investing in community finance providers through our Affordable Credit Scale Up Programme to test and prove sustainable models that can be scaled and adopted by others and increase the overall provision of affordable credit.

And we’re working to help increase efficiency in the community finance sector through our Technology Investments, initially focused on improving the core loan management systems on offer.

We’re also supporting the growth of the sector with best practice tools and resources, co-created with providers on our programmes and other likeminded organisations.

Affordable Credit Scale Up Programme

*This programme isn’t currently open to new applications*

Launched in August 2019, our Affordable Credit Scale Up Programme is designed to provide tailored support to sustainably scale affordable credit provision as part of the wider transformation of financial services. And to help the sector develop a sustainable model for serving people in vulnerable circumstances. 

It is targeted at ambitious organisations that are operationally sustainable, with a proven track record of serving customers in vulnerable circumstances without reliance on grant income. 

The programme has committed more than £26.5m so far (over 80% of the funds we earmarked for this work) backing business plans projected to triple the availability of affordable credit to approximately £900m by 2025.  

Organisations on the programme are given support tailored to their unique needs, informed by their own assessment of their needs and our detailed due diligence process. Our support comprises either long term equity-like investment or debt funding, grant funding to develop organisational capacity and capability, or a mixture of all. 

We initially piloted the programme with five community finance organisations – Enterprise Credit UnionFair for YouFive LampsLeeds Credit Union and Moneyline. You can read more about each of them in our pilot organisation case studies

We’ve since expanded the programme to support more lenders providing affordable credit to customers in vulnerable circumstances, including the social impact FinTech Salad and Great Western Credit Union. And we have more investments in the pipeline. 

We know our funding alone isn’t enough, as demand continues to increase due to the impact of the pandemic and the cost of living. We continue to encourage other funders and stakeholders to join us in providing long term funding to scale up the provision of affordable credit and help fill a growing gap.

Technology investments

*We’re still looking for expressions of interest and pitch decks from Loan Management Systems providers up until the autumn. Interested parties can find an expression of interest form here. Alternatively you can email Jonathan Turner for more info at jonathan@fair4allfinance.org.uk*

We’re investing £5 million to develop new tech solutions for the sector. We’ve prioritised investing in Loan Management Systems to help community finance providers to better manage their customer data.

Our aim has been to encourage innovation within the sector as well as building on existing tech solutions that might be useful to providers. In February we delivered a webinar about this project which resulted in several technology suppliers express their interest to get involved – including those who are completely new to the community finance sector, bringing new skills and innovation with them.

We are in discussions with four technology suppliers as part of this investment and are supporting others who don’t require the investment but want to work with community finance lenders.

Find out more by watching our launch webinar or viewing the accompanying slides.  

We have plans for further technology investments in the future and would love to discuss co-funding opportunities with other impact investors. Please email Nard@fair4allfinance.org.uk if you’d like to find out more.

Income maximisation tools

Awareness is one of the biggest barriers to claiming benefits and over £15b goes unclaimed yearly.

We are working with benefit calculator providers, including Inbest, Policy In Practice and EntitledTo, to ensure the community finance sector not only has benefit calculators featured on their websites (and effective signposting for customers) but also integrates these into key customer journeys such as member and loan application, declines process and arrears. 

In addition, open banking data can be utilised to make the output even more accurate, showing only those benefits people don’t claim. We’ve also reached out to loan management system providers, app providers, CRAs and price comparison websites to look at putting this into other vital parts of the customer journey.

Get in touch with Ayesha at Ayesha@fair4allfinance.org.uk for more details on how we can tailor this for your processes and customer journeys.

Supporting the wider community – toolkits, templates and learning

We’re developing tools and resources to help support smaller community finance providers and credit unions, which we’re aiming to launch this year.

These tools will be practical resources that can be quickly adapted to individual organisations and used immediately, including a Financial Reporting tool and a Strategic Business Planning template.

They’ve been developed following support we offered a number of credit unions during Covid and we’ve been investing to make these available to the whole sector.  We’ve also added sections on the cost of living squeeze – making these as up to date as possible.

We’ve also started work to deliver the key outcomes in our Governance, Leadership and Talent workstream including exploring a pilot of a digital learning platform to offer a huge range of learning materials.

Customer segmentation

We know how important it is that the right products and services are tailored to the right people. That’s why we’ve been working to develop customer segments and profiles that will help build understanding of people in vulnerable circumstances across the whole financial services sector.

We’re excited to share these as they will allow providers to better shape their products to the right audience and build operational strategies and marketing plans based on customer understanding.

We’ll be launching this work in the autumn with more details to follow soon.

Marketing support

We’re working with a leading financial services marketing agency to improve the marketing capability across the sector. Many of the community finance providers we support have identified marketing as a priority area and we’re putting in place support to develop that capability.

We’ll be sending out a survey to get a more in-depth picture of marketing capability across the sector. Your input will really help us understand the challenges you face. We’re aiming to deliver our marketing toolkits and templates to providers in Q1 of 2023.

Social impact reporting

This research aims to improve understanding of six credit unions impact on their customers and the wider Liverpool community and will support the participating organisations to build their internal systems for better customer data tracking. We’ll be publishing our findings in the Autumn.

Affordable Credit Theory of Change

Our Affordable Credit Theory of Change has been developed alongside the Esmèe Fairbairn Foundation in consultation with the community finance and financial inclusion sectors.

It is intended to be a shared Theory of Change for every organisation that is contributing to solving the problem of a subscale provision of affordable credit in the UK.

Fair4All Finance will work on part of this and in collaboration with others to drive systemic change.

Read our Affordable Credit Theory of Change