Mahi Sall, Advisor, Fintech-Bank Partnerships, Payments and Financial Inclusivity
January 25th, 2023
Mahi Sall is the CEO & Founder of FinXpair, a Berlin-based strategic advisory boutique firm focu[...]
New UK report: Access to financial services: 1 in 7 people are financial excluded
LexisNexis | Apr 4, 2022
According to the World Bank, 1.7 billion, or around 30% of people across the globe lack access to useful and affordable financial services that meet their needs.
Access to affordable financial services can play a huge contributory role in social mobility. Those with a basic bank account, for example, are more likely to apply for credit and savings products, to own their own home and to protect their assets through insurance. Financially included people are more likely to be offered affordable rates on utilities and other credit risk-dependent services. Inclusion can vastly improve personal and economic outcomes – increasing the likelihood of people accessing proper healthcare and education, encouraging
entrepreneurialism and boosting consumption.
See: World Bank’s investment arm injects $10 million into FintechOS to help boost financial inclusion
Fintech is making it better but long way to go
The global financial inclusion picture has already vastly improved over the past 10 years. Since the last financial crash, an estimated extra 1.2 billion global citizens have gained access to basic financial services, driven in part by the rise of Fintech. Yet, inequality remains, with those from poorer households, rural areas and ethnic minorities disproportionately underserved.
One in seven financially excluded in the UK
Analysis shows that around 7.1 million people (one in seven, or around 14% of the adult population) in the UK fall into the definition of ‘financially excluded’, meaning they could potentially struggle to access affordable and fair financial services. It also found that over 637,000 people fall into the definition of Credit Invisibles, rendering almost three-quarters of a million people effectively un-scorable in credit-risk terms.
Regional matters
Combining 2.6 billion records with powerful statistical linking technology, the analysis also provides a detailed, regional overview of financial exclusion and its underlying causes across the UK adult population. Using data across 380 UK local authorities, LexisNexis® Risk Solutions has provided a granular picture of the extent to which populations, right down to community levels, could be suffering from financial exclusion and vulnerability. An interactive heat map shows how financial exclusion is distributed across the UK population, and how regions compare.
At the heart of the issue is the way in which providers traditionally determine risk.
See: So what is financial exclusion in the era of Open Finance?
Credit checks pull data from credit bureaus, which only look at a very narrow view of an individual. And they don’t just discriminate against bad credit history, but also look disapprovingly at so-called ‘thin credit files’, otherwise known as a lack of a credit history.
Continue to the full article --> here
View interactive Financial Exclusion heat maps --> here
Download the 27 page financial inclusion PDF report --> here
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