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Guest blog: Guest blog: How do you build your future?

Guest article by Sacha Romanovitch, CEO, Fair4All Finance. This article was first published in Society Matters magazine.

Sacha RomanovitchGuest article by Sacha Romanovitch, CEO, Fair4All Finance. This article was first published in Society Matters magazine.

In the busyness of dealing with the here and now, it’s crucial for leaders and organisations to hit pause and reflect on their purpose.

Why does an organisation exist? What’s it in service of? Looking back this way helps us see that organisations can and do change the world – when they are intentional in pursuing their purpose.

Since originating back in 1775 building societies have played a significant role in the UK’s history, helping people save for their futures and buy their own homes. They’ve contributed to societal shifts, such as enabling broader voting rights through the Great Reform Act in 1832 and facilitating increased home ownership, as rising   wages and a doubling of housing stock transformed the number of people who owned their own homes from less than 30% in 1910 to some 65% by 2016.

These changes shaped the assumption that by retirement most people would own their homes outright, free of housing costs. Home ownership became an asset that could be passed down generations or used for care in later life.

Yet revisiting purpose in light of today’s realities is essential to build for the future. The housing landscape has shifted considerably. A lack of house building, cheap money and a period of lower wage growth has seen a massive hike in house prices and the rise of the buy to let landlord market.

Millions of people are trapped in private rentals, paying landlords’ mortgages while struggling to save a deposit and prove creditworthiness for their own home. The pandemic and cost of living crisis have made these challenges much harder.

While the dream of retiring in a home you own has come true for many over 65s, homeownership rates are declining for all age groups below that. In 1991, 67% of the 25 to 34 age group were homeowners. By 2011/12 this had dropped to 43%. Similar falls were seen for all other age demographics.

Alongside this the number of people in financially vulnerable circumstances has grown. Our segmentation study in 2022 identified at least 17.5m people in financially vulnerable circumstances in the UK.

3.9m are categorized  as ‘Squeezed and sliding’ including homeowners struggling with rising interest rates and living costs and navigating  life shocks that have eroded savings. Then there are the 1.3m ‘Unsteady starters’ – typically younger people with irregular or unstable work. They face a rental market often demanding six months’ rent upfront.

Given these dynamics, the role and purpose of building societies and mutuals in helping people save for the future and buy their own homes takes on a new urgency.

Many organisations – and indeed whole sectors – fail due to boiling frog syndrome. They continue to deliver products, manage business models and regulate for a world that no longer exists. The opportunity and challenge for building societies is to revisit that founding purpose. How do you adapt your offer to fulfil your purpose in today’s world?

One way we’re doing this at Fair4All Finance is by working with purposeful organisations on proposition pilots, through the no interest loan scheme and by looking at new methods to consolidate existing debts to reduce the burden of higher cost credit.

Leading in an industry with such a proud legacy is both a joy and a responsibility. The question is how the boldness and pioneering spirit of your founders is carried by you in forging a future in a very different world.

How do you build your future? One block at a time. Understand the realities of those you serve (and more importantly who you are not serving yet). Innovate and deliver the products and services that provide them with stepping stones to financial resilience. Be thoughtful of your part in the system.

You can build a future that lives up to the legacy of your founders – but only if you choose that path!

Find out more:

The Fair4All Finance segmentation study can be found at https://fair4allfinane.org.uk/segmentation