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Fintech leaders, we hold the key to inclusive banking. Now is the time to act.

It’s often the case that those who have the least often experience the worst service. And in the world of financial services, this statement is very true.

The latest 2019 government report showed that 1.3 million adults in the UK are unbanked. It is also estimated that one in four adults will experience financial exclusion in their lifetime, according to We Are Digital. 

There has been a lot of talk about financial inclusion. We see campaigns from both newly established fintechs to high street banks making media headlines, yet still in 2021, millions of people are struggling to secure a job or rent accommodation because they don’t have access to financial services. 

So my question is, why is financial exclusion still a problem today, and what role can we as fintech leaders play in helping to solve this?.

Paying the ‘poverty premium’ for being unbanked

It’s unbelievable to think that in the digital-led world we live in today, financial inclusion is such a significant problem. In the UK, for example, 7.5 million adults rely on a very basic banking service - not even a standard high street current account. Essentially this allows them to receive an income and pay for goods and services - two simple activities that underpin life in the UK, and are essential elements for being an active part of society.

Having worked in the fintech sector for the best part of my working life, I’m probably more aware than many of the challenges that financial exclusion can present. Being ‘unbanked’ can actually mean you end up spending more - with no access to online payment methods or discounted rates for payments by direct debit, even paying for your basic necessities suddenly becomes more expensive.

Opening a bank account is not as simple as it sounds

It was during conversations with some UK recruiter friends of mine about the struggles they were facing with bringing in and paying overseas workers that really opened my eyes to financial exclusion - a lack of access to mainstream financial products and services. 

In the year ending March 2020, 715,000 people migrated into the UK - with 36% mainly coming for study and 32% mainly for work.  When coming to the UK to start a new life, opening a bank account is not necessarily the first thing on a worker’s mind. Once a new job role has been secured, priority then turns to finding accommodation, tackling language barriers, and understanding a new culture and way of living. In fact, in countries such as East and West Africa, or Romania and Bulgaria, where cash is still very much the primary form of payment, opening a bank account may not even register as a priority.

So the obvious next step to the man on the street would be to visit a high street bank and simply open a bank account. But without a permanent UK address or 3 months of utility bills, this can become a long and tedious process, during which time they are unable to have their wages paid to them. Overseas workers tend to come to the UK to work in lower paid sectors - for example agriculture where approximately 50,000 workers are employed seasonally, or healthcare which employs more than 200,00 non-British workers. This can leave them vulnerable to illegal working practices or forced labour in exchange for cash and a place to live in order to simply survive.

And it’s not just overseas workers who can find themselves financially excluded. Although financial exclusion is most commonly associated with low income households and those living in deprived areas, it actually can affect a much broader proportion of society - the unemployed; the elderly of which an estimated 600,000 are financially excluded; and those living with physical disabilities or mental health issues. Other factors include those who have experienced significant debt or bankruptcy in the past and are therefore classed as high risk.

So how can fintechs enable the democratisation of digital banking

Fintechs are uniquely placed to support those who find themselves underserved by traditional banking solutions. By nature, they are agile and innovative and therefore their role is to act as a facilitator to ensure that their customers have access to digital financial services.

Unlike high street banks, fintechs are less encumbered by legacy systems that are difficult and expensive to adapt. They are also not burdened by the costs of expensive branch networks and huge payroll. Additionally, traditional bank culture is risk averse with high hurdles such as brand and compliance to overcome. The onboarding process can be simplified thanks to modern technologies and streamlined KYC services; banking services can be more easily accessed through a mobile app; and ultimately the underserved in society are no longer left behind when it comes to accessing financial services.

Branch banking can play an important part in financial inclusion - especially for more elderly populations who are not digitally savvy, and in areas with poor internet coverage. Approximately 12 million people live in rural locations with poor internet access and 3.8 million UK households have no internet facilities according to the UK government’s ‘tackling financial exclusion’ report. As more and more bank branches close, and digital infrastructure improves, it’s important that this section of society are educated about, and have access to, online financial products and services. So how can fintechs reach out if digital communication simply isn’t an option?

One step fintechs can take to overcome this is to partner with key organisations to educate and support their customers - helping to alleviate potential financial difficulties and reduce risk of exploitation in the workplace.

  • The GLAA regulates businesses who supply labour to the agriculture, shellfish gathering, food processing and packaging sectors.

  • The Association of Labour Providers (ALP) promotes responsible recruitment across industries such as construction, food, manufacturing, warehousing and the supply chain.

  • Just Good Work helps businesses to develop an informed and engaged workforce from overseas, and empowers migrant workers with knowledge about working in the UK.

  • The Emerging Payments Association inclusion project provides vital resources on the issues of financial exclusion and the poverty premium.

There’s also a clear need to demystify some of the jargon around financial products. With investments and life insurance, for example, where the product structures haven’t changed in years, more thought should be given as to how to make these appealing to a wider demographic, such as Gen Z. Think of Nutmeg, Moneybox or Cover Genius. Afterall, it’s this younger generation who hold the power when it comes to future financial investment growth.

It’s not just a PR stunt

Financial inclusion should not be seen as a PR stunt - even if HSBCs recent ‘no fixed address’ UK bank account campaign may have felt like one. But the core message this campaign delivered was sincere - everyone should be able to have access to a bank account. Because let’s face it, without one how do you ever escape the financial exclusion trap? 

Through the power of innovation, fintechs can offer their customers an all-inclusive digital financial solution, empowering those members of society that have been deprived of a banking system for so long, and ultimately helping the whole economy. 

Fintech’s, it’s time to act and join forces with other key players to educate and finally take responsibility for financial exclusion.


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Matt Oldham

Matt Oldham

Co-Founder and CEO


Member since

30 Jul 2021



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This post is from a series of posts in the group:

Financial Inclusion

The financial services industry has much to contribute to the UN and World Bank goal of full financial inclusion by 2020. This group will focus on industry contributions, ideas, barriers and enablers.

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