SFE Insight | Financial resilience and social innovation

This blog was written by Jamie Jenkins, Policy & External Affairs Director, at Royal London Group, the UK’s largest mutual financial services organisation, with a substantial presence in Edinburgh and Glasgow. 

As we near the end of the second year of the pandemic, and move ever closer to Christmas and the financial challenges it can bring, I wanted to reflect on the role financial services play in helping build financial resilience through products, services and driving social innovation.

National research commissioned by Royal London in August, of 2,000 UK adults, found that the pandemic has had a huge impact on our lives, from the way we work, shop, and live, and for many, it’s also had a significant effect on income and personal finances.

More than a quarter of Scots felt more financially vulnerable than they did in March 2020.  31% attributed this vulnerability during the pandemic to a reduced income, while 13% had a lack of savings to fall back on. Other reasons included taking on more debt (13%) and redundancy and job losses (11%). In total, only 17% of people in Scotland felt very financially resilient.

This tallies with research we’d undertaken with our own customers in February 2021, with lower affluence customers having the lowest level of confidence in achieving financial goals.

Why financial resilience matters

Being financially vulnerable refers to someone who may be exposed to financial hardship and at risk of not being able to recover from sudden economic changes, or life shocks. Financial resilience is not one thing. It is built up through a steady income, that allows for some buffer or savings, having relevant protection in place, and having strong personal support networks, amongst other elements.

The balance of these enables a person to feel both financially and personally secure, and able to manage unexpected shocks; whether a sudden bill, illness, unemployment, or in the worst imaginable case, a pandemic. Therefore, knowing that a large number of people feel vulnerable - in particular as we move to an often financially challenging time of the year - is cause for pause, and concern.

The role of financial services

Financial services companies traditionally enable financial resilience through providing products and services that help mitigate the impact of life shocks, including insurance to protect against critical illness, or to provide financial cover for people’s home or car.

Having a workplace or private pension in place can provide for added security in later life, alongside a state pension. There is a wealth of guidance and educational material offered across the industry, to support from childhood into adulthood, to enable people to be better equipped to manage their finances.

But the role of financial services is changing to include wider societal benefits; whether by investing in areas to combat climate change, holding other companies to account in how they treat their customers and staff, or to engage in important challenges facing society. It is no longer good enough for businesses simply to focus on maximising profit for their shareholders at the expense of all other issues.

Supporting those in society facing financial resilience issues

As part of Royal London’s focus on making a meaningful difference for its customers beyond its products and services, we’ve been developing a holistic approach to one of the key purposes we’ve identified; ‘helping build financial resilience’.  Our Flagship partnership with Turn2us, a UK poverty charity, who have a strong legacy in Edinburgh, has enabled us to donate over £400k to help people access their helpline and grants. This enables us to support those facing immediate financial resilience issues.

However, we also believe that there is a role for different partnerships to bring new ideas and innovations to market. So we’ve committed £1.5m over three years to support social entrepreneurs and enterprises, who are aiming to improve resilience and protect people against life shocks.

Social Innovation and Changemakers Programme

Social innovation is the process of creating and implementing new and better ways to solve social and environmental problems.  

Our Changemakers programme was launched in early 2021 to support and identify both early stage social entrepreneurs and existing enterprises to come up with clever, sustainable ideas to deliver real impact for people, whilst becoming financially sustainable through trading. Through our partners, Year Here and School for Social Entrepreneurs, we support them from idea to launch, to scale and growth stages.

Our first 10 Changemakers are diverse, covering concepts and products including breadmaking, paper flowers and financial planning, often built on direct experience of the challenges they’re innovating on, and supporting those who are financially vulnerable to learn skills, and increase income. Indeed, our panel to choose the final 10, had two lived experts who had experienced financial hardship and were able to provide invaluable insights into solutions they felt would have the greatest impact and reach.

Before I Go Solutions

Before I Go Solutions is one of our 10 Changemakers. Jane Duncan Rogers founded her social enterprise following the death of her husband, having been left to sort all their financial affairs at an already distressing time in her life.  She found there is a crisis in the way we talk about death – in that we don’t – and not enough people are organising things the way they want to before their death.  Ultimately, she aims to make end of life plans as common as birth plans and help people and their loved ones discuss, decide, and document their wishes. Although HQ’d in Inverness, it is an international social enterprise, providing products and services online, offering training in end of life plan facilitation and helping people across the world.  The Philip Rogers Scholarship Fund side of the enterprise allows people from disadvantaged areas and countries to train as Facilitators and bring this work to their communities.  

The role of social enterprises in innovation

Social enterprises are mission-driven, commercial businesses, an ethos that Royal London naturally is close to, as a mutual organisation.  According to the most recent census, Scotland has over 6,000 social enterprises, employing more than 88,000 people, with a total combined income of £4.3bn. Social enterprises are often developed out of lived experience of a life shock, and a desire to improve and innovate in areas that perhaps larger organisations are not as well placed to tackle.

For us, a mutual mindset means working with our customers, charities, social enterprises, and private and public sector partners, to share lessons learnt, and solutions. This will ultimately enable us to drive improvements and change for the greatest number of people at moments of crisis.