Growing Purpose-Driven finance
What we do
We are building a movement for banking with social and environmental purpose in the UK, uniting people from the purpose-driven banking sector, civil society, and those with lived experience of financial exclusion.
Significantly expanding the size and impact of financial organisations that put social and environmental purpose at the heart of their mandate, governance, culture, business models, and ownership structures will be key to building the financial system of the future.
Our 2030 goal is that purpose-driven financial institutions become mainstream in the UK, with a significant proportion of the public using them, and with purpose-driven financial institutions holding an important share of total assets.
We have started this work with a focus on the purpose-driven banking ecosystem (also known as stakeholder banking), including credit unions, community development finance institutions (CDFIs), ethical banks and building societies, and mutual banks.
Current campaign – Fair banking for all
The UK suffers from high levels of financial exclusion in relation to comparable economies. Despite important government initiatives and commitments, millions of people do not currently have access to the financial services they need for day-to-day living. This is a serious, but hidden part of the cost of living crisis. At the same time small and medium sized enterprises (SMEs) also find themselves without access to the financial services they need to grow.
The Lab is part of the Fair Banking for All coalition, which is campaigning for a Fair Banking Act for the UK – click here to find out more about the campaign and to get involved.
Why purpose-driven finance?
Millions of people are excluded from basic financial services in the UK. For example, over 10 million people in the UK, mostly on low incomes, have few or no options to access credit. As a result, around three million people are forced to turn to high-cost credit providers and one million to illegal loan sharks. This contributes to poverty, rising levels of problem debt, and to financial vulnerability. This problem will increase significantly as a result of the cost-of-living crisis. Mainstream banks have failed to meet this need, having little incentive to provide options to people they perceive as ‘high risk’.
Mainstream finance providers are also poor at directing finance to the needs of the real economy. In particular small and medium sized enterprises (SMEs) – often recognised as the lifeblood of local economies – struggle to meet their financial needs via mainstream finance, and many regions of the UK are underserved.
There are alternatives that can provide a lifeline for marginalised people, families and businesses, and offer hope for a more inclusive, sustainable and democratic financial system. We call this the purpose-driven finance ecosystem. In many other developed countries, these kinds of responsible providers are thriving, but in the UK the sector is far too small – around one tenth the size of high-cost credit providers. We are working to build the power of this ecosystem, and the power of those who use it, to win changes that will enable it to grow and better address the challenges of financial exclusion, whether that be in personal or SME business lending.
Purpose-Driven Banking professionals
The purpose-driven banking ecosystem is full of people who know their businesses and their communities inside out, and who are committed to providing effective and ethical services for their customers.
We aim to bring together the different institutions and perspectives across the ecosystem, to build its collective voice.
There are various ways you can get involved with this – you can receive general updates on our work, have a conversation with us about contributing your expertise and insight, or join our campaigns for policy and legislative change.
Civil society organisations, and people unable to access financial products and services
The financial system and the people who make decisions about it can seem very distant from our everyday lives. But people made that system, and people can change it.
We believe people with lived experience of financial exclusion should contribute to changing the system so it better meets their needs. We are building our programme to do that in a way that acknowledges and shares power.
If you work with a civil society organisation that addresses financial exclusion, whether nationally, regionally or locally, we’d love to connect with you.
Contact our job-share Heads of Movement Building and Campaigns to find out more.
Key publications and insights – Growing Purpose-Driven Finance
For further insights from the programme, see our Growing Purpose-Driven Finance insights page.