Supporting community banking.
Credit unions are an important part of the Government's Financial Inclusion Strategy. There is a need to raise awareness and reduce any potential stigmas associated with cooperative saving and borrowing. For the financially unstable who are unable to ontain a loan from banks and other reputable institutions, credit unions are a safe, secure alternative to turning to door step lenders, or 'loan sharks', to borrow funds necessary for a basic standard of living. Often, these unions have little budget for advertising and typically rely heavily on word-of-mouth promotion. They continually need to balance savings to loan ratios.
In 2009 we began talking to East and West Sussex Credit Unions about what their needs were and ways in which we could work in partnership. As a result we have delivered the following:
We provided support for a marketing campaign to 82,000 potential clients for the credit unions to attract new ethical investors and loan applications. Through our support we have been able to encourage other funding from local government and regional development agencies such as SEEDA (South East England Development Agency). This has seen a real impact upon the financial sustainability of their business:
West Sussex Credit Union
- Membership has increased by 15%
- Loan agreements increased by over 130% during November 2009 and continued to increase by a further 115% in December.
- They matched their highest ever-approved monthly rate of 60 cases during December.
- Membership packs requests total 142 during this period, which is an increase of over 65% based on the previous two-month period.
- Loan rejection rate has reduced from 53% to 28% demonstrating that the new literature is clear and understandable for applicants.
- Loan/saving membership has increased from 50.61 to 58.35% during this period.
East Sussex Credit Union
We identified and supported three key areas of need for East Sussex;
- the services of a professional marketing agency to design materials (leaflets, posters etc).
- enabled the ESCU budgeting advisor to be available on more days to see those in financial difficulties.
- covered the expenses of the student intern, to enable ESCU to have a dedicated resource to work alongside the agency.
- Since the funding membership at East Sussex Credit Union has grown by more than 200 members.
As a business Legal & General has learned more about the issues and challenges of encouraging people to start saving from our involvement with Credit Unions. Mark Gregory Group Executive Director of our Savings Business has spent time being talked through some of the day to day challenges of running a Credit Unions Savings Business and some of the product design features offered by credit unions to balance debt reduction with savings.
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