How to digitally transform our way to financial inclusion

financial-inclusion---plant-in-change-jar

We’re regularly told about our increasingly connected society and all the new opportunities this has created. We can socialize, shop online, search and apply for jobs, file forms with the government, socialize and of course, bank. However, there are still boundaries. Nearly 2 million adults in the UK do not have bank accounts and are therefore left out of the digital economy.

The lack of financial inclusion – the affordable access to financial products and services – is an ongoing issue. The UK’s percentage of people without bank accounts is one of the highest in the Western world, but plenty of other countries have even higher numbers. According to the World Bank, India and China have the largest share of unbanked people.

It is easy to take financial services for granted. But plenty of people cannot, including low-income individuals who struggle to afford the basic network connectivity necessary for online financial services, or refugees, asylum seekers and even ex-prisoners who are unable to prove their identities and therefore unable to open bank accounts. Elderly people also often have difficulties.

Without access to financial services, people and families can find themselves shut out of modern life.

There are efforts underway to expand financial inclusion. The World Bank’s Universal Financial Access (UFA) project has set a goal that by 2020, adults who currently aren’t part of the formal financial system will be able to have access to a transaction account to store money and also send and receive payments. Digital technologies, and the digital transformations occurring across the financial industry, also can help.

New technologies and services in the payments industry are creating opportunities to address the challenges financial inclusion poses. For example, start-up electronic money institutions and other fintechs that issue e-money or provide electronic payment services can cost-effectively service this demographic in a safe and regulated manner.

For established banks, technology could help keep individuals out of debt and even offer new opportunities for the “unbanked” to become part of the financial services network.  These new technologies include digital identification services that support Know Your Customer (KYC) measures, innovative mobile apps that help with money management and the U.K.’s required ring-fencing, which separates core retail banking from investment banking.

Four steps to financial inclusion

I recommend four actions for a more financially included society:

  1. Banks need to be more open and willing to partner with fintechs and IT service providers to deliver solutions that enable and foster innovation in the financial management space.
  2. Banks and pre-paid account service providers need to encourage better money management through gamification and loyalty programs.
  3. Access to financial services must support a variety of channels that give customers choice, including banks on wheels, social media channels and both online and brick-and-mortar banking.
  4. Financial management education should a part of the school curriculum to teach students how to manage their funds and to understand the technical jargon that is abundant in the world of financial services.

In the future, will we be able to say that we do, in fact, live in a connected world that is financially inclusive? That is yet to be seen, but the signs are looking good. A society where everyone has access to basic financial services can only be a good thing and will allow for a fairer, safer, more prosperous environment for all.


James Georgiou headshotJames Georgiou is a solution lead in the Cards and Payments team across EMEA and has previously written blogs on the changing nature of payments. Connect with James on LinkedIn.

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