Bridging the gap: How UK firms are addressing financial inclusion

At its core, financial inclusion refers to the access and availability of financial products and services to all individuals and businesses, regardless of their socio-economic status, background, or geographic locations. Whether accessing banking, savings, credit, insurance or payment methods; financial inclusion aims to empower marginalised and underserved populations by providing them with the tools and resources to participate in the financial system. 

Financial inclusion is a critical part of economic development and social progress, and its implications are profound, impacting every corner of society, from individual prosperity to national economic stability. 

Why is financial inclusion important?

One of the main barriers to financial inclusion is the lack of access to traditional banking services. Millions of people around the world remain unbanked, relying instead on informal financial services that often come with high costs and limited financial security. 

Other factors such as poverty, gender inequality, lack of documentation and financial literacy exacerbate the problem, further excluding individuals and communities from accessing suitable financial products and services. 

Achieving financial inclusion is not just about expanding access to financial services; it is about promoting economic empowerment and fostering social equity.

How can firms help to promote financial inclusion? 

Today, many firms play a crucial role in advancing financial inclusion. With innovative, digital solutions that address many of the barriers that traditionally exclude individuals and communities from the formal financial systems, firms and fintechs alike have the potential to transform the financial services landscape and bring millions of unbanked individuals into the financial system. 

What’s more, it is crucial that industry events, networking, and discussions are promoting the importance of financial inclusion to those involved in developing financial products and services.

CEO of FinTech Week London, Raf De Kimpe, shares how he ensures his flagship fintech event prioritises financial inclusion themes: “Since the inception of Fintech Week London, we have focused one of our key themes on ‘Fintech for Good’, which has provided a spotlight for topics such as diversity, equity, and inclusion. 

“We have had over 50% female speakers each year and are continuously including more people of colour and individuals with disabilities in our discussions. It is important for us to collaborate within the industry, and partnering with initiatives like Project Nemo, which is a new disability inclusion initiative in the fintech industry, helps to progress matters of inclusion and increase awareness in the wider conversations.”

How can firms ensure that their products are accessible to all?

It’s important for firms to ensure that their products and services are both developed with accessibility and user-friendliness in mind for those with varying levels of financial literacy.  

Raf shares his take: “To ensure accessibility and user-friendliness for individuals with varying levels of financial literacy, it is important for companies to bring in experts right from the start of the development process. These experts should be people with experience of their market, and they should want to build a product or service that is designed to meet their customers’ needs, and not just the market needs.”

Firms leading the charge for financial inclusion

Fintechs and other financial institutions are already making inroads and paving the way towards financial inclusion. With innovative technology platforms that provide accessible, customisable and affordable financial products and services, businesses are already developing user-friendly apps, online platforms, and digital wallets that cater to individuals who lack access to more traditional banking services. 

What’s more, many fintechs are already promoting financial literacy and awareness through their platforms. Whether educational resources or handy tools integrated into their technology, fintechs are at the forefront of empowering users to make informed decisions when it comes to their finances.

Today, many fintechs are already playing a pivotal role in advancing financial inclusion to create a more equitable and accessible financial landscape for all. Some include:

Monzo

Known to many of us for their brightly coloured cards, Monzo offers a mobile banking app with features such as spending notifications, budgeting tools, and fee-free transactions abroad. As part of their drive for financial inclusion, Monzo provides simple, accessible banking services without the need to visit a physical branch, making banking more convenient and available for customers. With services like overdrafts and loans with fairer terms and no hidden fees, Monzo provides finance to individuals who may have been excluded from traditional banking due to a lack of credit history or low income. 

Plum

Plum is an automated financial assistant platform that helps users to track their spending, set budgets, and save money with smart spending analytics, budgeting and investing tools. With its user-friendly interface and personalised financial insights, Plum provides simple access to financial guidance with smart rules that allow users to save, invest, budget and spend on their own terms. Plum actively promotes financial literacy and empowers users to make informed decisions about their money, regardless of their background or financial knowledge. 

Pockit

Pockit offers a prepaid Mastercard and digital wallet, providing banking services to individuals who may have been excluded from traditional banking. The prepaid card allows users to make payments, withdraw cash, and manage their finances without needing a traditional bank account, build their credit score with the major UK Credit Reference Agencies, and earn cashback on everyday purchases such as groceries and household goods. 

Raf shares some examples of fintechs that stand out to him for already having a positive impact on improving financial inclusion in the UK: “I think one of the best examples is Go Henry. The goal set out by them is to help children and teens learn about money in a practical and fun way, while educating them about healthy financial practices. 

“Wise is another great example where fintech has positively impacted financial inclusion in the UK. It enables the customer to manage their money worldwide through seamless transactions using a single account, helping provide convenience and ease to users.”

How can fintechs work with traditional financial institutions and regulatory bodies to promote financial inclusion?

Financial inclusion is not just about new products and services. It’s about creating new ways to deliver access for the financially underserved people of the world. With newcomers entering the fintech landscape regularly, it is important for traditional institutions and regulators to find a balance that supports the benefits that using fintechs offer while minimising any potential risks to the financial system.

Raf explains more: “In promoting financial inclusion, it’s always going to be significant for fintechs to collaborate with traditional financial institutions and regulatory bodies. There are various marginalised groups that struggle to access financial services, including people with disabilities, migrants missing necessary documentation for KYC requirements, and those without official addresses for example. It is important to not only recognise the diversity within these groups, but it is also crucial to design solutions to service different demographics, and not work with a ‘one fits all’ approach.

“One way to do it can be seeking direct feedback from minority groups and involving stakeholders and experts from these communities early in the development process to ensure that the solutions are inclusive. 

“Collaboration between fintechs and traditional banks will be key in driving and promoting financial inclusion. However, it will be necessary for the industry to also acknowledge the other side of the coin, as digitisation does come with an element of exclusion for certain demographics. These populations may not have access to certain infrastructures needed to be included within the digitised world, so efforts need to be made in the collaboration to ensure all segments of society can live a financially included life.”