The potential of fintech to tackle financial inclusion is widely acknowledged, but what can we do to encourage, support and promote the development of game-changing solutions? This was the challenge posed to Tech Nation’s Fintech Delivery Panel, and which led to the design and development of our Finclusion campaign.
With an Advisory Committee bringing together fintechs, insurtechs and financial services institutions with civic society organisations and lived experience experts, the Finclusion campaign aimed to raise awareness of financial exclusion challenges, spotlight fintech solutions, and inspire and scale new innovation, alongside a broader call-to-action for the entire fintech community to collaborate on action to directly solve financial inclusion challenges to the benefit of end consumers.
Following this series of connected happenings – from virtual and in-person workshops, show-and-tell events and sprint challenges, with thought leadership across social and traditional media – here’s a roundup below of highlights from across the campaign, or listen to a recap in our Finclusion podcast series.
What is financial exclusion?
Who is financially excluded? And why does financial inclusion matter? Chris Pond, Chair of the Financial Inclusion Commission, highlighted statistics from the Financial Conduct Authority, including that one in five adults wouldn’t be able to cover more than a month of living expenses if they lost their source of income, and that a staggering one in six is borrowing to pay for essentials because they have run out of money.
The Finclusion launch event included a panel of experts explaining key areas of financial exclusion, including Fair by Design’s work on the ‘poverty premium’, a lack of equitable access to financial services and solutions for those with certain disabilities, the need to improve financial literacy among children and young adults, the barriers to building a credit history, and a lack of focus on improving financial wellbeing across society.
“Direct debits and standing orders are fine if you have a predictable flow of income, but not if you’re on a zero-hours contract. Insurance can provide affordable protection if you live in some postcodes – not in others. As a single parent, you might be the most diligent payer of bills, but your credit score might not reflect that.”Chris Pond, Financial Inclusion Commission Co-Chair of Finclusion 2021
A challenge was laid down to the fintech community to turn its energy and innovation towards providing products and services that address people’s real needs and match the way they live their lives.
“I believe it should be a mandate for everybody and, if you’re not running your business that way, eventually you will be extinct.”Sujata Bhatia, Monzo and Co-Chair of Finclusion 2021
“I don’t think anyone should be given the privilege that comes with being able to access this market if they cannot turn their heads to including the society that we’re all here to serve and that we’re all part of.”Edward Twiddy, Atom Bank
Tackling gambling-related harm
With statistics showing one in five British people gamble online regularly, and around two million people experience harm as a result, there is an urgent need to develop self-exclusion tools for gamblers. In a roundtable convened by the All-Party Parliamentary Group on Gambling Related Harms, banks, tech platforms, charities, and gambling blocking services explored the challenges and what more could be done to tackle gambling-related harm.
Research shows gambling blocks – where users can stop themselves from making debit card payments to gambling providers – can help people get their gambling under control. Once activated, more than 90% of people keep them. Half of those that do so spend less or no money after activation. And yet, 40% of UK current accounts don’t have a gambling block facility. Monzo is campaigning to make sure everyone can access a gambling block. Sign the Open Letter here.
Financial crime-fighters assemble!
FINTRAIL, a global financial crime and regulatory consultancy, took this opportunity to launch a new ‘inclusivity checklist’ to help firms consider where their anti-crime and anti-fraud checks might lead to financial exclusion, and what improvements can be made to mitigate against this.
Developed with feedback from Tech Nation Fintech Delivery Panel firms, the FinCrime Principles of Inclusion aim to offer a practical guide for FinCrime professionals to consult when designing or assuring their anti-financial crime frameworks.
“As anti-financial crime professionals, we may attempt to mitigate all our financial crime risks with the best intentions, but how often do we really consider the full impact of our controls and how they affect those who vitally need access to the financial sector?”James Nurse, FINTRAIL
A game-changer for vulnerable customers?
Newcastle University and Atom bank offered insights into their research on customer vulnerability, offering an example of how business and academia can collaborate to overcome barriers to financial inclusion.
These organisations have been working together via the EPSRC-funded FinTrust project to explore how vulnerable customers can self-identify as vulnerable to ensure they don’t become financially excluded, and how that identification can be verified. They have considered various prototypes for alternative ID verification – systems that allow the storing of user credentials on a decentralised blockchain – that could enable the safe sharing of data with other parties, such as trusted financial and third-party institutions. Next steps are seeing how this could be rolled out in real-life, providing the online equivalent of a “disabled blue badge” or “sunflower lanyard”.
Real solutions for real people
Claro Money, a fintech service offering a digital financial coach, provided a wealth of advice to people looking to get better control of their finances. This included practical tips like setting goals, budgeting, and adding friction to guard against habitual and emotional purchases, as well as making a conscious effort to address rather than avoid problems, suppressing limiting beliefs about being ‘bad with money’, and allowing for a ‘fun’ fund to help incentivise saving.
Auden, the fintech firm researching responsible lending, hosted experts considering how fintech firms can and should design for ‘real’ people and their real needs, discussing ways to ensure consumers are at the heart of product design and user experience. This included allowing consumers to raise concerns pre-arrears, as soon as they know they are likely to miss a payment, so that support can be offered as early as possible.
“There should be no such thing as ‘one size fits all’ in the world of fintech. Its most powerful potential lies in its ability to help people obtain much more personalised, tailored services to meet their needs. But, to reach that potential, any tech solution must start from the same point as its target customers. It is obvious, but perhaps still needs stating, that solutions and – more broadly – systems need to be built around the actual capabilities and needs of people.”Damon Gibbons, Centre for Responsible Credit
Serving the whole of society
Fair4All Finance CEO Sacha Romanovitch OBE chaired a panel discussion on how fintech can help reach the 14.2 million people in vulnerable circumstances. The panel explored the types of problems fintech should be trying to solve, and considered the business case for doing so.
Experts from NatWest bank led a virtual hackathon focusing on how communities less inclined to seek finance and funding solutions could be encouraged and assisted through technology, including those facing socio-economic barriers, people living with disabilities, ethnic minorities, and migrants. Budding business minds were guided through NatWest’s Business Builder programme of creative problem solving, ideas generation, building business models, customer personas, and pitching.
Reducing the financial impact of a cancer diagnosis and eradicating the insurance poverty premium were the challenges explored through a two-day hackathon hosted by NayaOne. Research suggests four out of five people with cancer are on average £570 per month worse off due to a combination of reduced income while undergoing treatment and additional expenditure on their care and wellbeing. Meanwhile, people living in deprived areas can pay almost £300 per year more for their car insurance. Adding on around £160 extra for paying monthly rather than annually means the poorest pay a premium of nearly £500 on top of their policy.
Adopting Corporate Digital Responsibility
How businesses use technology, and the resulting impacts on financial resilience, access and exclusion, are coming more and more to the forefront as we seek to build a progressive and inclusive future financial system.
In an interactive workshop hosted by Dr Karen Elliot, participants discussed models and tools that can help firms put the emerging theory of corporate digital responsibility into practice, using data and digital technologies in ways that are socially, economically and environmentally responsible. This includes ensuring fair and equitable access for all, promoting societal wellbeing, considering economic and societal impact of all decision making, and reducing technology’s impact on the environment.
New digital tools
The University of Cambridge Judge Business School’s Centre for Alternative Finance (CCAF) launched its suite of digital tools, aimed at providing organisations, policymakers and regulators worldwide with the timely fintech market data and visualisations that inform evidence-based decision making, and looking at how public data initiatives can support inclusive business models and drive financial inclusion.
If you’d like to learn more we’ve captured many of the debates and discussions in a new Podcast series co-hosted by Victoria Roberts, Director of Tech Nation Fintech Delivery Panel, and Shan Millie, Founder of Bright Blue Hare and Co-Chair of Finclusion 2021, featuring guests from Monzo, Atom bank, Loqbox, Newcastle University, Financial inclusion Commission, Fintrail and more! Available now to listen direct or through Apple and Spotify.
Listen to the Tech Nation Finclusion podcast series:
Episode 1: What role can fintech play in financial inclusion? with Chris Pond & Loqbox
In this episode we hear from Chris Pond, Chair of the Financial Inclusion Commission, about the significant financial exclusion challenges facing many people across the UK, and from LoqBox co-founders Tom Eyre and Gregor Mowat on the solutions they’re creating to help build and improve credit scores.
Episode 2: How can fintech address gambling addiction? with Monzo & GamCare
In this episode we hear from Natalie Ledward, Head of Vulnerable Customers at Monzo, alongside Raminta Diliso, Financial Harm Manager, GamCare on the ways financial services providers and charities can innovate to support those struggling with gambling addiction.
Episode 3: Are anti-financial crime checks driving financial exclusion? with Fintrail
In this episode we speak to James Nurse, Managing Director at Fintrail, and Ravi Shukla, Head of Tech Nation Fintech Delivery Panel, about the barriers anti-financial crime checks can pose to financial inclusion, and the checklist of principles they’ve developed to address this.
Episode 4: How to harness and support the role of fintech for good? with Fair 4 All Finance and Fair by Design
In this episode we hear from Jonathan Turner, Technology Strategy and Innovation lead at Fair4AllFinance about their work supporting the community finance sector through the Scale Up Fund, and Carl Packman, Head of Corporate Engagement at Fair By Design explains the No Interest Loan Scheme currently being piloted across the UK.
Episode 5: How can data and digital identities support inclusive financial services? with Atom bank & Newcastle University
In this episode we speak to Edward Twiddy, Chief Customer Officer at Atom bank, and Karen Elliott, Senior Lecturer in Enterprise and Innovation at Newcastle University about the use of data in financial services, how this drives consumer outcomes, and the need for increased focus on corporate digital responsibility.