Bridging the gap

One of the overriding themes of this year’s Innovate Finance Global Summit is how FinTechs can (and should) be a force for good within society. A key aspiration is to open access to financial services to the financially excluded or underbanked. Daniel Korski, CEO of Public.io, chaired a panel at the Summit, entitled Financial Inclusion: Will Digital Decrease Disparity?, which explored the role that FinTechs, and technology and digitisation more broadly, can play in bringing financial services to previously under-served groups.

Daniel kicked off the panel by sharing some statistics about the state of financial inclusion globally. For example, two billion people worldwide currently do not have access to banking services. Moreover, women are disproportionately excluded from the financial system, emphasising the need to address the gender gap in FinTech in order to provide products aimed at increasing the provision of financial services for women.

Financial inclusion is a particularly acute issue in developing markets; however, the UK still has a long way to go. According to Daniel, there are 1.5 million people in the UK without access to banking services. While this number is decreasing, the savings ratio has fallen since 2010; 13 million people in the UK do not have enough money to support themselves for one month were their income to fall by just 25 per cent.

Given all of these statistics, there is optimism that FinTech can help redress this lack of financial inclusion. Eva Gustavsson of PayPal expressed her hope that FinTech “uses its extraordinary power and potential for good”, by giving unbanked and underbanked individuals “access to convenient, affordable and secure financial services”.

Virraj Jatania, founder and CEO of Pockit, believes that the key to addressing the imbalance in financial provision is to “get people more comfortable with financial services”. Daniel agreed, citing research that showed a number of people in the UK “choose not to have a bank account because they feel more comfortable with cash”.

Virraj spoke about the importance of educating customers, for example by “building educational tools into [FinTech] products”. Eva called upon governments, educational bodies, non-profits and the private sector to come together to educate under-provisioned customers on financial products and services.

This education would encourage consumers to, for example, no longer “borrow money through the fastest route rather than the best route for them”, according to Freddy Kelly, co-founder and CEO of Credit Kudos. He described current credit rating agencies as “opaque". He believes that incorporating more behavioural data into credit scores and decision-making could improve transparency and help banks to more accurately price credit for individuals with little or no credit history.

Kabir Kumar, Director of Policy and Ecosystem Building at Omidyar Network, described the integral role that technology and digitisation have played in improving financial access in developing markets. He gave the examples of how mobile money made financial inclusion possible in Africa, and how the Indian government’s digital identity programme, Aadhaar, was a critical driver as it laid the foundations for other digital infrastructure, such as interconnectivity between banks and WhatsApp-enabled payments.

In closing the panel, Daniel called on all attendees to go away from the Summit thinking about “what you and your institution can do to ensure these 1.5 million people [without access to banking services in the UK] are no longer excluded from financial services”.