Almost a year on the reality of the COVID-19 situation is growing ever more present.
It’s been a difficult twelve months for many people and the economic turmoil caused by Covid-19 looks set to continue throughout 2021. As we approach the year mark since the announcement of the first national lockdown, the reality of the situation is growing ever more present.
The BBC recently reported that British employers made plans to cut a record 795,000 jobs last year, with The Office for National Statistics discovering approximately 12.5 million people in the UK had been financially affected by the economic crisis. Worryingly, almost 700,000 people and 120,000 children have been plunged into poverty due to Covid-19 according to The Legatum Institute.
Undoubtedly, more support is required to secure people’s financial stability. From fairer finance to more access to digital banking, what do we need from 2021?
Encouraging people to save
The pandemic has shone a light on the economic inequalities within our society that were prevalent well before March 2020, and in fact the pandemic has made things even worse. Research from Stepchange found that household borrowing and arrears related to the pandemic had soared by 66% from May to November 2020, with people in low and middle-income households more likely to request emergency loans.
The Bank of England announced that household savings had risen substantially, with 42% of higher-income households saying that they had accumulated additional savings since March 2020. In comparison, only 22% of lower-income households had saved more during the same period.
The economic shock of Covid-19 is a wake-up call for many. To protect our communities, we need more awareness to encourage better saving habits. Emergency savings can provide a safety net, helping to secure people’s financial wellbeing throughout the crisis.
Supporting businesses and the local economy
With many businesses left unable to operate over the past twelve months, the Government has announced several schemes to help organisations stay afloat during the crisis.
On 5th January 2021, the UK Government announced £4.6 billion in new lockdown grants of up to £9,000 to help businesses in the retail, hospitality and leisure sectors, with an additional £594 million in discretionary funds for businesses in other industries. Though these funds may prevent shorter-term damage, they won’t be enough to save many organisations from closure. The Federation of Small Businesses’ latest report discovered that 250,000 small enterprises are set to fold if they do not receive further financial help.
With businesses currently at risk, regulatory bodies such as The Financial Conduct Authority (FCA) have announced plans to help safeguard organisations from the burden of increasing debt. The FCA warned major banks not to squeeze extra fees from their corporate clients during the pandemic, with the authority declaring they would “not hesitate to take action” if banks did not comply.
For organisations that need additional financial support, access to affordable and fair loans can help to provide a lifeline for many, offering an alternative to high-interest lenders on the high street.
A new age of financial technology
Covid-19 has accelerated the growth of financial technology, helping millions to access their finances without leaving their homes. According to Finder, 14 million people across the UK are now using digital-only banks with no branches at all and this figure could grow by almost 10 million in the next five years.
Also, 12 out of 13 fintech sectors reported year-on-year growth in the first six months of 2020 when compared to the same period in 2019, according to a recent study by The Cambridge Centre for Alternative Finance (CCAF), The World Bank Group and The World Economic Forum.
We must not underestimate the need for more financial technology across the country. Improved access to these services can help to reduce poverty and provide economic growth for the UK economy. At Bristol Credit Union (BCU) our new digital platform is key to our future expansion. We’re aiming to establish BCU as the first choice for ethical and affordable finance in the South West of England, helping us to lead in the thriving fintech industry.
Better off together
Here at BCU, we are focused on the year ahead with the energy and commitment to grow, continuing our purpose to make money do good. When you save with a credit union, money is recirculated into the regional economy benefitting local people and businesses. Across the next five years, we aim to triple our membership to enable us to reach more people than ever before.
Since 1999, we have helped more than 33,000 people to start saving and this year we will continue to raise awareness of our services to improve even more people’s financial security across the South West of England.
The merger between Bristol Credit Union and Wyvern Savings and Loans will help us deliver better services for existing and new members and this will be completed in the first quarter of 2021, with Wyvern’s Dorchester branch providing a base in the south of our region.
Our challenge though is not to deliver banking as it used to be, with a network of branches across every small town. That model is neither cost-effective nor practical and it expects people to travel to us, often using public transport that is all too limited. Instead, we must embrace the future and meet our members and potential members digitally and in-person wherever and whenever they need us, and as locally as possible too.
As we implement these changes throughout the coming year, make sure you’re updated with our progress by following us on Facebook, Twitter, Instagram and LinkedIn.
Our friendly Bristol-based team is always ready to help you with any questions or issues you may be facing. If you require any of our services, make sure you get in touch. Send us an email or call us on 0117 924 7309.
