Mahi Sall, Advisor, Fintech-Bank Partnerships, Payments and Financial Inclusivity
January 25th, 2023
LexisNexis | Apr 4, 2022
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.
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.
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.
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.
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.
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