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A new report from Fairbanking Foundation finds overwhelming evidence that Save As You Borrow (SAYB) schemes by credit unions can be successful in turning people into habitual savers. Research by the Fairbanking Foundation carried out by Ipsos MORI shows that 67% of SAYB users who had no savings, and found it impossible to put money aside, now have plans to save regularly throughout the year as a result of using a Save As You Borrow product.

This habitual change, brought about by the integration of savings features in financial products, has been hailed by the Archbishop of Canterbury as “having a transformative effect on the financial lives” of SAYB users. The new Save As You Borrow – Credit Unions Creating Good Habits report, was launched at a session of the All-Party Parliamentary Group on credit unions.

Illustrating the scale of the positive impact of SAYB schemes, the report found that only 26% of respondents were saving regularly before taking out an SAYB loan. Through the positive effect of SAYB encouraged saving, 71% of users said they would continue to save regularly throughout the year after paying back the loan. An overwhelming majority of 97% of respondents confirmed that they found the approach from credit unions helpful in encouraging them to save.

When respondents were asked about how they thought their SAYB product was helping them, almost a third replied that they would find it difficult to save if it wasn’t done for them through their loan. One in five also replied that they realised the need to set funds aside for a “rainy day”. Only 15 out of 1,055 respondents said that they thought saving while repaying the loan was unhelpful.

Credit union loans are among the most competitive in the market for amounts up to £3,000. Although customers might think that it takes a little longer and there is an incremental increase in the interest costs of SAYB loans, the additional cost brought about by the savings features will in most cases prove to be very small. On top of this, 79% of people said that this approach was worth it in the long run. 17% of these spontaneously said that it paid off, quite literally, in terms of having a lump sum at the end of the loan and 12% said that it helped change their approach to saving in the future.

In addition to the SAYB impact, the report analysed the effectiveness of further product features that are deemed positive for the financial well-being of their customers and found that many of these prove highly effective as well, such as the support that is given to borrow the right amount: 81% of respondents said that they had reviewed their income and expenditure in order to work out how much they could afford.


Jennifer Tankard blogs about the need for a radical new approach to financial inclusion


Have you ever tried to survive for a week without something you think is essential to life? Chocolate for lent, booze after Christmas, cakes before your summer holiday?  What if you had to live without access to basic financial tools for a week?  Without access to a transactional bank account, so that you could only pay bills in cash and in person?  Without any form of savings so that the simplest set back meant a trip to high cost credit providers? Without insurance so that something lost is lost for good not lost until a replacement arrives?


Access to basic banking facilities is an essential part of modern life, as employers and government agencies move away from cash and cheques towards electronic payments.  Small and micro businesses are also affected by difficulties in accessing basic affordable financial tools, often relying on easy access to bank branches to bank cash safely.


Effective tools for savings, payments, and accessing credit and insurance can help people to climb out of poverty or get through a crisis or emergency without falling into debt.  They can help businesses survive and grow and not slide into bankruptcy should a crisis occur.


The UK has made real progress in ensuring that most adults have, at least, some form of bank account. It is estimated that only 3% do not.  This is broadly in line with European neighbours such as Germany, France and Slovenia.  It also compares well with others such as Poland (30% without access to a bank account) and Italy (29%).  Still the 3% in the UK, some three million individuals, are effectively financially excluded by a lack of access.   And access to other types of financial tools remains patchy.  59% of UK households have savings of less than £5,000 and 56% of the poorest households do not have home content insurance. The reliance by many on pay day loans to get them to the end of every month is well documented.


A recent experiment in America organised by the Chicago based Center for Financial Services Innovation gave a group of white collar workers tasks to perform without using mainstream financial services.  These included buying a pre-paid card and cashing a cheque. Needless to say it wasn’t a happy experience.  The cost of transactions, the time spent in queues and the lack of security of personal data took participants by surprise.


This is why the Community Investment Coalition (CIC) is calling for a radical new approach to financial inclusion.  We believe that every adult, household and business should have access to a basic package of fair and affordable financial tools to help them participate in economic life.  These tools are: a basic transactional bank account; a savings scheme; access to affordable credit; physical access to branch banking facilities; insurance; and independent money management advice. We have launched a Community Banking Charter calling for the provision of these basic financial tools and setting out the steps required to achieve these.


Achieving this radical change does not require radical measures.  Political leadership, capital investment, better local partnership working and asking the main retail banks to step up to the plate are some of the steps needed.


The experience of the American white collar workers is shared by ordinary people every day in the UK.  CIC partner Local Trust commissioned a video detailing how a lack of access to basic financial services impacts on everyday life.


The UK’s emergence from recession will not result in a rush by the financial services sector to move into new markets in poorer communities.  Many people will benefit from economic growth.  But those without access to key financial tools are likely to get left even further behind.  We need radical change.  And it needs to happen now.


Jennifer Tankard leads the Community Investment Coalition (CIC) and is Director of Advocacy and Research at CDF.