Our £70k grant will help grow the availability of fair and affordable credit in the South of England through making credit unions stronger regionally.
Increasing access to affordable credit is an important tool in the fight against financial exclusion. Much of that access is currently through community finance providers like credit unions and Community Development Finance Institutions (CDFIs). So we’re keen to help this sector grow and serve more customers in vulnerable circumstances.
Over the past few months, we have been working with Boom Community Bank and Berkshire Credit Union to support their merger.
Boom Community Bank is a well established credit union created by a merger between West Sussex Credit Union and SurreySave in 2016 which has 10,000 members in East Hampshire, Kingston, Surrey and West Sussex. Since then Boom have demonstrated a strong commitment to scale up their business, the number of members they can serve and the products and services they offer.
Berkshire Credit Union were a small, profitable credit union in a neighbouring area, with around 2,000 members who were demographically similar but who had a relatively small loan book. They approached Boom to seek a merger which would enable them to achieve greater scale and improved services to their Berkshire membership.
We provided a £70k grant to help us test the impact of supporting merger work. Our funding covered costs enabling Boom and Berkshire to realise the benefits of coming together in digital marketing, increased choice in products and customer service and local expansion in Berkshire. Specifically, our support included the integration of hardware, networks and licences.
From a regional perspective, the merger will strengthen service provision in a wide area of the South of England running from the M4 down to the coast, and including Berkshire, South Oxfordshire, South Buckinghamshire, North East Hampshire, Kingston, Surrey and West Sussex.
David Wright OBE, Chair of Boom Community Bank said: ‘The financial support Fair4All Finance provided was an essential component in the recent successful merger with Berkshire Credit Union. This pump priming support provides a strong platform for the enlarged organisation, with its additional operational capacity and reach to deliver the scale up of affordable, responsible credit to many thousands of new customers in the former Berkshire Common Bond.’
At Fair4All Finance, we want to see a strong, growing and sustainable credit union sector that increases access to fair and affordable financial products and services and supports people in vulnerable financial circumstances. Strategic business consolidations like this, where larger credit unions can make use of their substantial product, service, back office and administrative capabilities to support smaller credit unions in growing, make significant contributions towards this goal.
Mark Jasper, CEO and Treasurer of Boom Community Bank said: ‘As the impact of inflation and interest rate increases bite we are seeing many new people reaching out to us. The ability to grow Boom’s reach with Fair4All Finance’s support means we will be able to save borrowers hundreds of pounds in interest compared to high cost lenders.
‘Boom has long benefitted from a strong collaborative partnership with Fair4All Finance and I am delighted they were able to support this step change in our evolution and development. It really is great news for the residents of Berkshire as well as those in our existing common bond areas as we can accelerate the social value we can offer through sustainable growth.’
Our experience at Fair4All Finance through our interactions with credit unions indicates there are often significant barriers to business combinations, even if there is a strong strategic fit. Non-recoverable merger costs would diminish members’ funds, with other hurdles including technology migration, culture and due diligence.
We’re keen to help credit unions retain and deploy their funds in service of customers whilst enabling them to consider and complete business combinations that make the sector stronger. The Boom and Berkshire merger is a good example of how we test and learn what works well to achieve this and we are looking for opportunities to further support the sector with best practice advice and future similar projects.
Gabor Balint, Programme Manager, Growth and Development at Fair4All Finance said: ‘We’re really excited to play a role in supporting this merger between Boom Community Bank and Berkshire Credit Union. Both have a strong record of serving their customers and this move will allow for a greater level of service and access to affordable financial products in the South of England. We know costs for moves like this can sometimes be prohibitive and we’ve been pleased to be able to help.’
We’re looking forward to continuing to work with Boom Credit Union to learn more about their progress of integrating Berkshire credit union into their operations, including the challenges in making a business combination work and how these can be overcome.
We view this engagement as an example of the positive impact strategic and well planned collaborative mergers can have. In particular it was helpful there was a clear strategic alignment and cultural fit between the organisations which were both financially viable and were seeking the target customer base we work with, people in vulnerable circumstances.
We hope that further strategic mergers will help increase the regional strength of credit unions and achieve greater economies of scale.
If you would like to discuss a business combination opportunity where you think Fair4All Finance could help, please contact Kate Pender at firstname.lastname@example.org