Presentation Transcript

1. The Financial Wellbeing of the Birmingham Community

   Brenda Spencer, Community Banking Manager, Adrian Oldman, Head of Partnership Development Citysave Credit Union 31st July 2013
2. About Citysave Credit Union Birmingham-based, established for 25 years Run by members for the benefit of our 10,000 members and here to support them and our communities Promote responsible borrowing and financial wellbeing No sales culture & no penal charges High volunteer presence – workplace and community Fully regulated by FCA & PRA Liquidity of 50% and capital of 15% Deposits covered by the FSCS
3. Citysave 5 years ago Mainly providing savings and loans for employees of Birmingham Council Typical member was in relatively secure employment with decent benefits structure Savings often for aspirational purchases e.g. Car; holiday; home Average age of member mid 40’s Average loan was c£1200
4. A changing world Citysave now provide payroll deduction schemes in c50 organisations – mainly public sector & NHS 50% of members save through payroll deduction 30% save through benefits – including DLA; Child benefit; pension; income support; All members expected to have a savings plan from £2 per month Average age of member has fallen to mid/late 30’s Average loan size has fallen to <£700 We have active outreach programme across the city Office is open 6 days a week and 44.5 hours a week
5. Citysave today Segmented our loan book for better member service Max turnaround on loans 24 hours (full assessment) Most loans are instant (profiled for members) Same number of staff issue >2x loans issued 5yrs ago We survey all loans to monitor service and feedback: 96% of members rate us as excellent 98% would recommend us to family / friends Loan book is growing (not as fast as our savings!) Bad debts reduced (net cost currently c2.7%) Loan income is c80% up in 4 years – and is the basis for our sustainable organisation
6. The need to do more: 9m adults without fit for purpose banking solution Home credit & mail order £3bn & growing Arrears on utilities - £637m risen 33% in 12 months 100k on prepayment meters in Birmingham Arrears on rent and mortgages common High cost, highly promoted and easy access payday lending sector now worth est £2bn Growth in Payment cards such as Paypal & Paypoint JRF report 2013 on Poverty Premium is that it is rising and now 10% of household income
7. Birmingham 2013 Birmingham has 187 identified communities – Super Diverse Highest %age of under 25’s in EU Significant numbers working part time or flexible hours, and zero hours contract common Substantial need for financial services that overcome barriers to including language, literacy, confidence, trust Need to reach into different communities through different media efficiently Different levels of vulnerability means a need to deliver a wider range of products to a wider range of membership Need for supportive products – solutions must be high impact as well as low cost
8. Predators in our midst High cost lenders widely established 9 Money Shops alone in the city Easy access, attractively packaged and highly promoted Cost is high in both interest and fees Easy rollover and debt grows rapidly Low visibility & barriers to redemption Often don’t show on credit searches Responsible lenders working harder to assess loans Rapid growth in debt interventions, debt management plans and debt relief orders showing clear adverse impact on those we seek to support
9. Welfare Reform Local Housing allowance 28,600 £32m Under Occupation 15,000 £10.1m Non dependent deductions 7,100 £8m Household benefit cap 1,350 £6.5m Council Tax Benefit 88,000 £13m Disability Living Allowance 10,100 £30m Incapacity Benefits 26,200 £92m Child Benefit 143,100 £51m Tax Credits 113,300 £92m 1% uprating £85m Total impact for Birmingham £419m
10. Citysave’s Commitment Committed stakeholder in the FairBrum campaign with our specialism being financial inclusion Our mission is to: Inform on the issues of the day in a responsible and coherent manner To provide constructive and joined up solutions As part of this we are holding a series of events entitled The Financial Wellbeing of the Birmingham Community Focused and informative events Event 1: understanding and removal of the poverty premium; Event 2: Identifying and tackling financial stress;
11. Birmingham Fair Money We are partnering widely with CU’s and CDFI’s promoting an alternative We are delighted to welcome Moneyline moving in from September to offer loans from £50 - £300 in a responsible manner Working with local authority to be disruptive to payday lending in the autumn period payoffpaydloan@citysave.org.uk campaign www.citysavehome.org.uk info blog
12. Help needed to support our work Regulation of high cost lending sector Easier redemption of this lending More visibility to other lenders ie we would ask for the same easy access register of higher cost lending that is in US – to allow us to quickly analyse small, instant loans for non members Transparency of lending & financial services in our city We need a more even playing field
13. Local support Birmingham Council are being hugely supportive of our work Looking at how we can tackle the impact on individual households because of predatory & high cost lending Assisting promotion to overcome the imbalance in marketing budgets The council has also committed to using all available information from banking disclosure to inform and develop a better response in the city & to campaign for all the information we need to allow us to do better with the resources we have
14. Cllr John Cotton – #FairBrum
15. Community Banking Service Range of accounts from 50p per week No hidden /penal costs High quality visa card High visibility – New integrated web site with access; monthly statements & text balances From 16+ No credit check required 24/7 Emergency Advice Service – legal, medical and debt
16. Visa card Sort Code and Account Number Manage account and make payments on line Free cash back at supermarkets Cash back rewards :
17. Partnering to drive out cost and increase accessibility: Care Sector, support and intervention agencies Housing providers Employers and welfare to work Councils Utilities
18. Trusted Partners Permission for another trusted organisation to open accounts for their employees, tenants, customers, clients Account opening is done at partner locations By authorised and trained staff ID is taken and verified Overcomes all barriers to account opening A Trusted Partner App has been developed to simplify this
19. Service Centre On Boarding Accounts come into the centre from kiosk, web site or Trusted Partner app A call is made from service centre within 24 hours Explain our service & T&C’s Set up payments in and out if required Set up savings plan Order card Send welcome pack Diary for next contact Relationship management – ie regular, proactive and multi media information – texting, email, blog, in writing and phone
20. Invested in Kiosk network Touch screen, and easy to navigate High functionality provides access to Citysave account/services & other key partners for financial inclusion and literacy Discreet source of help, advice and support confidential and free to use
21. Findings so far – the good The cash planner – is the basic account and take up is very strong indeed Popular with staff, partners and members It isn’t quite reaching breakeven but closing in on 3000 we need to do so High impact and low cost delivery credEcard is proving popular and we have been able to automate all elements Call centre is embedded – new digital phone system The kiosk is very popular – feedback is that it will be used to seek information and help because it is so discreet Emergency advice line –very popular and well received
22. But we have just reached the starting line....much more to do Budget account is too complex for those that need it Takes time for us or our partners to explain product Financial literacy is very low The scale required is huge Layering impact of Welfare Reform is starting already Changes in time scales Not easy to engage with utility providers Intervention agencies and local authorities have funding cuts and other priorities
23. Creating real solutions... Cash planner is popular & so we move to that being sole product ....with ‘bolt ons’ ie bill payment to council tax, rent or utility Common concept allowing a simple base product solution with valuable added benefits Commissioned an Action Research project with Centre for Responsible Credit to evaluate products, delivery, cost and its benefit to the users and other stakeholders The output will inform and guide product development and scaling to meet the needs of a modern generation Funding and support is provided by RBS Group
24. There are many ways to climb a mountain... Lots of options being trialled We continue to evolve our solutions to best meet the needs in our city Happy to share our learning & learn from others Will be fed in through Damon & the Centre for Responsible Credit Thank you