On financial inclusion
There are still more than a million people in the UK who don’t have a bank account. They end up paying a banking “poverty premium” of around £500 extra each a year for bills and basic services because they’re missing out on preferential deals and discounts on utility bills, mobile phone contracts, broadband and personal loans. The knock-on impact on people’s lives is significant.
On the pandemic
Our research shows that the coronavirus pandemic has left 37% of Brits – that’s 19.4 million people – feeling in the dark about their financial future and unprepared for an economic downturn. This is even more prevalent for those with a household income of less than £15,000 a year, where the figure rises to more than half (53%) of those surveyed saying they are not financially prepared. That’s pretty scary.
On digital inclusion
I think COVID-19 has really exposed the links between digital exclusion and poverty. In the UK, 11.7 million people lack basic digital skills and there are an estimated 1.9 million households with no internet access. And this digital divide is most pronounced for those living in poverty; almost half of those with an income below £11,500 lack essential digital skills compared to less than 11% of those with an income over £25,000. It’s a vicious – or a virtuous – circle.
On innovation driving inclusion
One way to drive further financial inclusion is through prepaid cards, which provide many of the same benefits as bank accounts. Another is Request to Pay. Imagine you’re a student struggling to make ends meet: you’ve got just enough money in your bank account to last you until the end of the month, and then your mobile phone bill comes in. It’s more than you thought, and it pushes you into your overdraft. Request to Pay is a secure messaging service that allows billers and consumers to communicate before payment takes place, so you could request to pay half of that phone bill now and half later, for instance. It puts control in the hands of the consumer, and helps businesses and individuals settle bills flexibility and transparently. However, whilst it may not be a long term fix for exclusion, where individuals, businesses and others rely on cash, they should be able to continue to do so as part of a choice of payment methods available in the UK. In fact digital innovation has a role in ensuring that cash is more readily available to those that want it, through initiatives such as cashback at point of sale.
We helped to establish the Financial Inclusion Commission, an independent body of experts from financial services, businesses, the charity sector, academia and parliamentarians from all major parties, set up to improve the state of the nation’s financial wellbeing. We also support The Inclusion Foundation, which brings the industry together to tackle financial inclusion and accredits products and services that help the financially under-served. We know it’s going to take partnerships and collaboration to move the needle.
On the future
There’s a trade-off between protecting the status quo and preparing everyone for a digital future. We know, for example, that there’s still a certain segment of society that is very reliant on cash and using local banks. Do we spend time and money maintaining that kind of infrastructure so we can continue to serve that community, or do we divert some of those resources into helping to digitally engage that segment of society? Business, government and civil society must work together to find the right balance between protecting what’s needed for today and preparing for tomorrow.
To create a more inclusive society, I would...
...fix the digital divide as a social priority. Alongside the Good Things Foundation, we are calling on the government to invest £130m over the next four years to level up opportunity, fire up the economy and give 4.5 million more people access to digital skills, devices and services.