Why the Smart Money is moving into Inclusive Finance

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Our Region in Action

When Smart Money Cymru Community Bank started life in Caerphilly in 1989, it was the brainchild of local volunteers keen to encourage savings within their community – and help people who typically struggle to get loans and finance from mainstream sources such as banks, building societies and other commercial-based lenders.

Over the past 30+ years, this groundbreaking credit union and mutual society has become a beacon for inclusive finance, gradually expanding to cover Caerphilly and Blaenau Gwent, merging with other credit unions to extend a service that is now a preferred finance option for thousands of member-customers – and something of a lifeline to many people in communities across two of our region’s most economically disadvantaged counties.

The past two years of pandemic has driven Smart Money to become as innovative as it is inclusive, through a digital transformation that’s seen this community bank’s performance soar – achieving a record +44% growth in membership, an astonishing +95% upturn in loans made, a remarkable +56% increase in deposits taken, and a best-ever +45% growth in revenues generated.

With lack of access to fair and affordable banking widely acknowledged as a major contributor to social exclusion – and signs that this exclusion may become more acute as the UK faces significant economic challenges – we spoke to Mark White, CEO of Smart Money, about the inclusive vision and inspired performance of this pioneering community bank.

 

Finance that includes, enables and empowers

Mark put the success of his organisation into the widest perspective:

“As a credit union and mutual society that’s effectively ‘owned’ by our members, we’re founded on a tried and trusted model that stretches back two centuries. Yet I believe we’re more relevant than we have ever been. Our service is at the heart of including people in society and the economy. It’s central to personal wellbeing and empowering everyone to be active citizens. And it’s vital if our region is to really level-up, address inequalities and give everyone the chance to help build an inclusive prosperity. Those imperatives are front and centre for governments and millions of people in many communities, so I believe our time has come.

“It’s well documented that lack of access to affordable banking services contributes heavily to social exclusion across the UK – and that’s amplified here in Wales, where many of our communities are socially, financially and digitally excluded through economic deprivation, rural isolation and lack of access to both financial and internet services.

“Our approach is to promote a culture of saving within communities, then keep that money in those communities by lending to members and helping to tackle financial exclusion. It’s a co-operative model that’s empowering communities to take more control of their banking services, at a time when the country faces one of the biggest economic challenges ever seen.

“We’re fully regulated by the Financial Conduct Authority and the Bank of England, just like any other bank or financial services company – and our customers’ savings are protected under the Financial Services Compensation Scheme, just as they would be if they deposited their savings into a mainstream high street bank or building society.

“So ours is an inclusive service that’s here for the greater good, delivering the widest possible value to individuals and communities, with minimum risk.”

 

Digitising to offer more services to more people

“It would be fair to say that we were an almost completely paper-led organisation at the beginning of 2020, with digital technology playing little part in the way we operated or interacted with our member-customers.

“When COVID hit, our challenge was to survive and stay relevant, offering the type of digital services and speed of response that the world was quickly coming to expect. We also realised that this was an opportunity to grow by widening our reach and expanding our services outside our traditional geography  – so we wholeheartedly embraced a digital strategy based on Aiming High, Enhancing & Adapting and Working With Partners to Find Solutions.

“We grasped the opportunity given by the Welsh Government to adopt a new loan processing platform so that our member-customers could apply for loans online – and chose technology partners who could bring connectivity, flexibility and adaptability to our customer offer. Overnight, our loan processing time went down from four days to less than 24 hours, and sometimes to less than 60 minutes.

“Realising the power of digital inclusion, we wanted to do more than just give instant loan decisions – and partnered with a supplier to create an online retail store, Smart Goods, that offers over 5,000 home products and gifts, delivered direct to the door, using online finance from Smart Money.

“Smart Money is the first credit union or community bank in Wales to launch such a product – but it’s just one example of the digitally-driven innovations we are implementing to become an even more inclusive service. Our member-customers can soon expect to see automated 24/7 new member-customer onboarding, 24/7 loan decisioning and processing, 24/7 online transactional banking services – and a Smart Money branded debit card that will allow our member-customers to use their account just like any ‘normal’ bank account.”

 

A £3.5 billion community currently loaning £1.8 billion to members

Mark finishes by holding dear the principles of community banking – and looking forward to embracing the horizon:

“Rest assured, as a community bank and a social business, we are here for the 10% of our customers who need person-to-person service – and we’ll remain just as committed to those members who have their benefits paid directly into their account because they are fearful that some of it will be lost to bank charges or unexpected payments. We really are here for everyone who needs us.

“For us, it’s about building the most inclusive future on the strongest foundations. I’m proud to say that Smart Money is one of the 15 credit unions making a difference to people in communities across Wales – and delighted to see our digital transformation of the last two years has enabled us to grow our membership to more than 8,000 people, accruing £4.24 million in deposits and loaning over £3.8 million to our customers.

“Our trajectory is upwards and outwards as we expand across Wales – and I believe that type of growth will be common for most of the 395 credit unions similar to ourselves in the UK. Right now, those credit unions have just under two million members, hold £3.5 billion of deposits and are currently providing about £1.8 billion of loans to their members.”

Smart Money’s inspired vision and actions bring alive the fact that CCR’s four strategic goals of Innovation, Sustainability, Inclusivity and Connectivity inform and support each other – with this pioneering enterprise demonstrating an outstanding capacity to think innovatively and inclusively connect people to a sustainable banking service.

We applaud their ambition and their performance – and we’re looking forward to showcasing another extraordinary example of inclusion at work across our region, in next week’s #InclusivityInAction

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