Partnering to broaden financial inclusion

Our support for CDFIs and credit unions reflects our commitment to providing affordable, appropriate financial products and services to people who might not otherwise be able to gain access to them. In the UK, we believe a strong community finance sector is critical in providing people with an alternative to 'loan sharks', who have been known to charge over 1,000% in interest. This is why we are a leading corporate supporter of the Association of British Credit Unions Limited (ABCUL) and the Community Development Finance Association (cdfa), the two main trade associations for community finance providers. Between 2004 and the end of 2008, Barclays funding has helped over 100 credit unions and CDFIs across the UK, providing more than £2.5m to support community finance.

Our support for credit unions in the UK is currently focused through ABCUL. This partnership includes support for the CONNECT project, under which ABCUL has linked up with Citizens Advice to support the Financial Inclusion Partnership Project. In 2008, 12 partnerships between local credit unions and Citizens Advice Bureaux, developed through CONNECT, fed back on how they had developed their partnerships. In 2009, we plan to share this learning and best practice more widely through a tool-kit that has been developed and by championing the successful partnerships to date. We have also agreed a final grant to support the embedding of PEARLS, a financial monitoring system used in the UK credit union sector. This is a tool developed by the World Council of Credit Unions (WOCCU) and is being used in credit unions in over 20 countries around the world to help achieve growth and sustainability, whilst maintaining their social ‘ethos’. This system has now gained significant support from UK government and is becoming truly embedded in the way credit unions work.

Achieving a Step Change

Our partnership with the national trade association, the cdfa, is focused on supporting capacity building, effectiveness and sustainability. During 2008, we supported a second round of training and funding for CDFIs through the cdfa’s Step Change programme, focusing on improving governance, social performance measurement and managing loan delinquency. We also tracked the progress of those who received support in the first Step Change programme in 2007.

This programme has delivered significant benefits for CDFI participants to date.  Examples of its achievements include supporting the launch of Grimsby Moneyline, a new CDFI located in an area identified as high priority for financial inclusion by the UK Government’s Financial Inclusion Taskforce. The technical support and grant provided under Step Change enabled Grimsby Moneyline to hit the ground running.

Other beneficiaries include Preston Moneyline, which improved its approach to marketing through the Step Change training and grants. As a result, Preston Moneyline managed to increase the size of its portfolio by 470% between 2005 and 2007, delivering a major boost to financial inclusion for people in Preston. Meanwhile, the longer-established East Lancs Moneyline has used the scheme to enable it to invest in better delinquency management to ensure it can recycle its money locally.