On ‘Finclusion Day’, a reflection on the importance of digital inclusion
By Gaia Lamperti
May 31st marks the first annual ‘Finclusion Day’, celebrating financial inclusion within the payments sector. The term “financial inclusion” is associated with individuals and businesses that have access to appropriate financial products and services meeting their needs.
Although financial inclusion has improved drastically over the last decade there’s still a long way to go to truly make financial services accessible to all. In the UK alone, around 1.3 million adults remain, ‘unbanked’, meaning that they do not have access to a bank account.
As financial services increasingly move to digital platforms, a form of “digital inclusion” is needed first to make sure that more communities can benefit from FinTechs groundbreaking services.
On the occasion of ‘Finclusion Day’, The Inclusion Foundation and The Payments Association have explored four core pillars which they believe are the driving force of financial inclusion:
- Technology can allow for reduced costs of providing financial services and through technologies such as Open Banking, businesses can gain a deeper understanding into their customers.
- Government has a role in controlling credit availability and the need for tighter fraud prevention tools due to the growing number of complex financial offerings.
- Education is of digital innovations essential in businesses to retain and upskill adults in work, with the seismic shift towards digital across all sectors.
- Inclusive communities are important in driving change – many older people will enjoy being educated by their children or grandchildren, and therefore in most cases, financial education will have to begin in the home.
These organisations’ commitment to making digital innovations and technologies more accessible in order to support the financially excluded, culminated with the release of an ebook, ‘The Network Effect: Digital payments as a gateway to financial inclusion,’ presenting digital inclusion as a prerequisite for financial inclusion.
“Digital and financial inclusion should be top priorities today. All UK adults should be able to access financial services that meet their daily needs, goals and aspirations. Being financially included begins with opening a bank account, which is much more than just a means to make and receive payments: it’s also a gateway to credit, insurance, pensions and saving products,” commented Marion King, Chair of the Advisory Board, The Payments Association.
During the COVID-19 pandemic, digital payments soared and 12% of UK adults downloaded banking apps for the first time. The paper states that the rise of digital is accompanied by the revolution in retail finance being brought about by Open Banking and new payment models which will hugely expand the reach of financial services to the underbanked and unbanked.
Neil Harris, Chair of the Inclusion Foundation, added: “Cash is the ultimate budgeting tool, and although there are many benefits to cashless, it is crucial to ensure that everyone is with us regardless of age, race, faith & social class. Digital inclusion is, therefore, a prerequisite for financial inclusion – one cannot progress without the other. Last year there was a 50% increase in online use, but around 4% of the UK population are still digitally underserved.”
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