Hate the banks? Meet those starting their own
Some savers are spurning traditional ways to manage money, writes Rob Stock.
Hate the banks? Well, stop moaning and set up your own. That’s what hundreds of Kiwis who set up ‘‘savings pools’’ have done.
Savings pools have something of the feel of informal banks, though the authorities would come down like a ton of bricks on anyone but a registered bank using that description.
They have been created by quiet revolutionaries who want an alternative to the ever-expanding private banking sector built on spiralling debt secured against ever more highly-priced housing.
The father of savings pools in New Zealand, Bryan Innes, explains that they function on ‘‘reciprocity’’, not interest.
Savers in pools earn ‘‘savings points’’. Borrowers pay no interest.
Innes says: ‘‘Our country would be utterly better off if saving pools were the normal way people financed their homes, or any of the things they go into debt for, because there would be so much less money going offshore.’’
Savings pools are governed by contracts, or ‘‘member agreements’’.
Loans are possible once there’s enough money saved into a pool. Borrowers are legally required to repay the money, just as if they had borrowed from a bank. But they are also required to make additional deposits so money is available to other borrowers.
The agreements of savings pools set up the mechanisms of governance to reduce the risk of mis-use, or theft of funds.
And each has rules on when people can withdraw their money. For example, if a loan has just been made, it may be some time before there is enough in the pool to allow another withdrawal.
Belonging to a savings pool can challenge money habits and taboos. For a start, it involves talking to other people you know about your finances, and theirs.
Savings pooler Phil Stevens says: ‘‘That’s one of the things we have to get over. Western society is rife with hang-ups. Our hang-up about money is one of the biggest.’’
Inspiration for New Zealand savings pools came from JAK Members Bank in Sweden, which is a mutual that runs on reciprocity.
Here in New Zealand, though, it is hard to keep the big privately run, interest-fuelled banks out of the savings pool equation.
The money in a savings pool that has not been loaned out is ultimately deposited in a bank.
Individuals are likely to use savings pools as their little bit on the side. That’s because savers can spend the interest they get from a bank, but can’t do that with savings points. Banks also provide services a savings pool doesn’t, such as eftpos and online transactional banking.
The enormous mortgages required to buy a home in a city like Auckland also seem beyond the reach of a savings pool, but Innes said there have been savings pool home loans made in New Zealand.
Innes says the system is flexible. . Agreements can be altered, and JAK Bank is an example of how big a financial entity based on reciprocity can become.
Savings pools operate below the radar. They aren’t very visible, as members must pledge not to discuss each others’ personal finances with outsiders.
But finding one isn’t too hard. ‘‘There are savings pools in the big cities,’’ Stevens says.
The Living Economies Trust can help. ‘‘We do maintain contact with a lot of the pools that are up and running,’’ he says.
‘‘A lot will entertain applications for new members. Some are happy to interview people.’’
And, if you can’t find one that will let you in, you could start one yourself.