Community Finance for London: Scaling up the credit union and social finance sector

Funded by Santander as part of its effort to support the community finance sector, the study focuses on how to develop affordable financial services in London with the solutions it outlines intended as a blue-print for the sector in general.

There is cross-party consensus that the major challenge for the credit union and social finance sector is the need to modernise and to achieve sufficient scale in order to offer affordable financial services to a wide range of households on low and modest incomes.

A major new strategic research study addresses the way forward in building scale and efficiency and in modernising the sector whilst maintaining the community finance ethos and vision that defines and differentiates it from the mainstream. The study was led by Paul A Jones of Liverpool John Moores University and Anna Ellison of Policis and has been developed in collaboration with leading credit unions and key stakeholders including DWP, ABCUL, social housing providers and local government representatives.

This new report explores the fit between need for affordable financial services and the capacity of community finance in the capital. It investigates the nature of the challenges facing the sector in scaling up to meet need and to achieve scale efficiencies. It also reveals how credit unions and social finance institutions are strengthening the social and economic cohesion of local neighbourhoods and communities.

Credit union membership in London has grown over 90% since 2005. Now everyone who lives or works in 27 of the London’s 33 boroughs can join a credit unions and there are plans to expand into two more in the near future. Nonetheless, despite this undoubted success, credit unions and the social finance sector still lack the capacity and the reach to extend their services to the many more low and moderate income Londoners who could stand to benefit from access to affordable financial services. 

The study argues that credit unions and the social finance sector now have a new opportunity to expand their reach throughout the city. Success will depend, however, the report argues, on a step-change in their organisation and management. It calls for a new radical collaborative approach to credit union development. The report describes a vision of credit unions and social lenders working in partnership with Central Government, local authorities, social housing providers, money advice agencies and other locally-based organisations in order to ensure that they can provide quality and competitive financial services at affordable rates whilst actively contributing to the local social and economic development of the city.

Both the Executive Summary and the full report are available to download on the right hand side of the page.