Our attitudes towards borrowing money only a couple of decades ago were vastly different to what they are today. That’s evidenced by our Director and Head of Guernsey, Kevin Harris, who reflects on his earlier years and how he was taught to manage his money.
“From a young age, I was always taught not to borrow”, Kevin said. “I was told that if you can’t afford it, don’t have it. Save your money.”
Borrowing had this stigma around it; to take a loan suggested that you perhaps weren’t successful enough to purchase items from your own pocket, needing support from the banks to pave your ideal way of life. To be in debt was a cloud over your head.
However, the world began to change in the 80s and 90s.
“Some people might recall the so-called ‘yuppie’ period” explained Kevin. “Having everything and having it now was an integral way of life, one that gave you status. The availability of debt took the wait out of wanting and a new generation of fast and furious frivolity was the norm.”
Close Finance has had a presence in the Channel Islands for more than half a century. In that time, we have lived through significant changes when it comes to lending, namely around consumer behaviours, geopolitics, economic policy, and societal norms.
Where are we today?
While there’s perhaps less of a stigma around borrowing and lending today, society is not as care-free as it was in the 90s. This is especially the case in more recent years, following economic turbulence that hasn’t been seen since the recession of 2008. Individuals have been ensuring their money is saved, rather than splurged, and businesses have been cautious about how they manage their cashflow, unwilling to add additional strain to an already stretched pocket.
But, as the Channel Islands recovered from the pandemic, there was a greater appetite to explore lending possibilities, and that has continued through to today.
Kevin explains “Lending can be a superpower for individuals and businesses. The ability to access additional funds in a responsible manner will enable the borrower to achieve their goals and objectives; whether that’s adding an extension to their house to accommodate a growing family, or to invest in brand-new technology to enable a business’s digital transformation.
“The important word in the above is responsible. We will always make sure our customers can afford to repay their loans at the time of application, which is a world away from where borrowing was when I began in the business. We would never have dreamed of asking to see an applicant’s bank statements,” he said.
“But why do we do that today? It’s a fundamental part of the process of evidencing that the loan is affordable. We don’t want to put anybody in a situation where we lend the money and shortly afterwards, it becomes apparent that they can’t afford to meet the loan repayments.”
What are people borrowing for?
“Over recent years, we’ve seen an increase in the number of applications for cosmetic surgery. Perhaps with the advent of social media, the majority are now far more conscious of their appearance, and this can play a big part in people’s self-confidence and how they believe they’re perceived”, Kevin says.
People are also increasingly looking at consolidating debt to reduce overall debt servicing costs and ensure disposable income is available month-to-month. Additionally, lending requests are regularly received for home improvements, indicating a preference of customers to enhance their existing property rather than moving and incurring all the costs that this entails.
The sky is potentially the limit for what can be done with the proceeds of a loan, as long as it’s legal, moral, meets our affordability criteria, and the team can understand how the money will be spent. Good customer relations and clear communication are key when talking about loan requests, as Kevin knows from experience.
“15 years ago, somebody rang me up and said, ‘I’m looking for some money for a banister’. At the time, I didn’t think the item would sufficiently meet loan criteria. However, following a discussion with the customer it turned out it was for his hotel, which had two flights of stairs that were quite wide and made of solid wood. But the original request was for a banister, which only amplifies the importance of really engaging with the customer, talking to them in detail in order to understand their requirements and gather all the information.”
After a long period of uncertainty, businesses are not only back on a much more even keel, but growth is most certainly on the cards. And this is where lending really comes into its own.
“By borrowing, you can make the required acquisition of goods, services, innovation, or people immediately rather than waiting until you’ve saved enough money to pay for it outright”, Kevin explained.
“You’re potentially having the goods today, and the savings you would have accrued each month effectively funds the repayment on your loan. So, there’s no real issue with borrowing if it’s structured appropriately and most importantly, it’s affordable.
“It’s a powerful tool for growth, as long as you’re not overextending yourself. It’s all about affordability and making sure that we as responsible lenders, are looking after the customer. We always ensure that they know and understand what they’re getting into and that whatever we propose as a lending structure, fits with their specific requirements.”
Of course, this doesn’t mean that we approve every request. The right outcome for the customer could be not to take on more debt if this is likely to result in financial hardship or distress.
It’s this way of working that gives our business its reputation of being a lender that makes its customers feel happy, safe, and secure. Our primary objective is to always treat customers fairly and ensure that what we deliver represents a good outcome for the borrower.
Two islands working as one
It’s not just our ethos of responsibility that sets us apart, it’s also the collaborative nature of our team whilst being spread across dual locations in the Channel Islands.
“While located in both Jersey and Guernsey, we see ourselves as one team operating in two islands. We have a team in Guernsey supporting our locally based customers, and a team in Jersey doing likewise.” Kevin said.
But team members often hop between the islands. This not only builds a strong team ethic and helps to develop relationships with colleagues, but it also helps to understand the differences in each market, as they do sometimes diverge.
“Whichever island you happen to be on, you can count on us to be your financial friends. We can be the supporting pillar of an individual or a business that has goals to meet and ambitions to reach. Responsibly, we’re here to help you see that lending needn’t carry stigma but can be your superpower.