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Why data is key to effective community finance

JenniferTankardIn December 2013, seven of the main high street lenders took a landmark step towards greater transparency in how they serve local economies.  The participating lenders, Barclays, Lloyds, HSBC, RBS, Santander, Clydesdale & Yorkshire and Nationwide, released data on personal loans, residential mortgages and loans to small and medium enterprises (SMEs) at a postcode sector level. Participating banks will release this data quarterly for lending in the previous six months. The second tranche of data is due for release in April.

This disclosure of lending data comes after a long campaign by organisations, including the Community Investment Coalition (CIC), that believed this transparency was essential to support effective interventions in markets under-served by the main high street finance sector, mainly deprived communities.  Many people and organisations working on financial inclusion issues across the UK knew anecdotally that businesses and households in deprived communities found it harder to access affordable financial services, but there was a limited evidence base.  The evidence we had included bank branch closures (see Nottingham university’s work); awareness of clustering of pay day lenders; and the lack of access to free to use ATMs in some areas.

So what does the first tranche of lending data tell us? It is early days and because of the way in which the participating lenders have released the data, analysis at a local authority level is not an easy task.  HSBC, for example, has released its data set in pdf rather than excel format.  A well-known ploy for making use and analysis of data sets difficult.

But Birmingham Council has mapped the data, as part of its financial inclusion work.  Richard Browne’s recent blog for New Start outlines the findings and that the data ‘tells a little but has the potential to tell a lot more’.

One of the key limitations of the data is that the seven participating lenders only cover around 60% of the lending market.  Requiring all financial service providers, including pay day lenders, to disclose patterns of lending and releasing additional information, such as number of transactions, individual loan amounts and where deposits are taken from would give a more nuanced picture about how financial service firms operate in local markets.

What is clear is that although release of this data has been a long time coming, it is here to stay.  At the Community Development Finance Association’s annual conference, treasury minister Sajid Javid stated that the government is looking at how it can go further with the data that banks publish on lending. He said, ‘we’ve made the decision that we are going to ask the banks to go further and if it requires legislation, then it will come, because the more data that can be shared will definitely generate competition and alternatives’.

CIC has always been clear that we didn’t want release of data for its own sake.  Rather we thought it could play an essential role in supporting partnerships between banks, local authorities and community finance providers, to consider how to increase the provision of affordable finance.  We have written to every top tier local authority in Great Britain (Northern Ireland is not currently covered by the voluntary scheme) highlighting the availability of the data, with links to the data sets.  Councils from the Orkneys to Plymouth are now looking at integrating the data into financial inclusion work.  If you would like to know more about the lending data and access the data sets, you can do so here.

 

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chris windridge
chris windridge
8 years ago

Useful data. Thanks for the link. Pity that for a significant post code cluster eg London, Croydon CR30, CR35 and CR36 which form our Neighbourhood Plan area, it only gives residential mortgage lending. Had hoped to get more accurate business data….that is a real challenge. Who are the local businesses, making contact with them, understanding their employment, skills, needs and so on. Just tried a Mail Chimp approach to 200 and have had just 29 responses after 2 weeks. VAT registration data went off the radar in 2006 at below district level, similarly NOMIS data restricted on enterprises to district level. Experian data on retail spend similarly hard to obtain. For a fee is easy but even where LA’s have access, getting to it for us as Neighbourhood Plan, still a void after several months of requests. Have used Doogle to generate post code maps and lists and slightly armed and dangerous but its murky out there. Come on Govt, if you want communities involved in encouraging and facilitating businesses let us have the tools and access, or funding to help us pay. I know that these and similar things may be on your lobby list, in which case where do I sign up to support!
Regards CR3 Forum

Jennifer Tankard
Jennifer Tankard
8 years ago

Hi Chris,

thank you for your comments. Yes, we are continuing to campaign to get access to more and better data. Did you see this explanation of how to analyse the data on CIC’s web site? http://www.communityinvestment.org.uk/?page_id=341 ‘Guide to use Personal lending data at neighbourhood level – a step-by-step guide for how to analysis banking lending data by Birmingham City Council’s Richard Browne’

Things you could do to help include:
Writing to your council asking them to analyse the data for the local area
Write to your local MP asking why better data isn’t available and directing them to CIC.
You can follow the campaign on twitter @BankingBetter.

If you want to contact me directly you can do so at Jennifer.tankard@cdf.org.uk.

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