Fintech for All: improving financial inclusion in the UK
A couple of months ago our 11:FS CEO David Brear was invited to be a judge of Tech City UK’s Fintech for All competition. This was a nationwide competition in 2017 to find fintech startups that make financial services work for everyone.
As well as some fantastic entrants and eventual winners, this event got us thinking about the wider implications of financial inclusion. Therefore we felt we really needed to do a podcast to delve into the issues raised and what this competition really highlighted, and how best the problems of financial inclusion and serving the underbanked can be solved in the UK.
What is Fintech for All?Laura and Greg outline the Fintech for All competition and its aims. It was commissioned by the government as part of their digital strategy to shine a light on fintechs and the contribution they're making to financial inclusion. Obviously, London had the highest number of entrants but were you surprised by the spread of entrants from across the rest of the country? 30% outside of London, a fantastic result considering London has 80% of all fintechs in the country. Likewise it was interesting to note that it wasn't just market entrants taking part, there were submissions from bigger organisations for the first time.
Financial inclusion: The StatsThe competition highlighted some key elements of financial inclusion and the struggles that people face in the UK everyday:
- 1 in 5 people can't understand a bank statement
- 2 in 5 have only £100 in savings
- 1 in 6 have serious consequences as a result of debt
- 2 million ppl don't have a bank account
- 1 in 33 don't have a bank account
- 24% have no savings
- 31% ppl have at least 1 sign of financial stress
What is the answer?Is it just fintechs and apps that will solve the problem, or is there an element of financial education that is also required, asks Simon. The answer, the panel agree is complex and multi-layered. It is firstly not just fintechs working on a solution. Greg highlights that the rising tide raises all boats - this isn't just fintechs, a lot of organisations are getting involved trying to solve the problem of financial inclusion. "Fintech isn't a panacea" says Laura Coffey.
"Fintech isn't a panacea" - Laura Coffey.Likewise, Miles highlights the interests of Money Advice Service to teach good financial behaviour and to continually research to see what constitutes good financial behaviour. He does concede that there is huge value in fintechs and the work they do including their ability to create digital tools at scale. He also says from his perspective it's important to raise the profile of the Money Advice Service as a valuable resource for both customers and businesses. He and Virraj also agree that understanding customers and how they're managing their money is hugely important. This research outlines what else you can do for your customers and gives companies an idea if what products they should be designing for this purpose. The team focus on the importance of research, not just on the products and customer needs but also customer engagement with the products, to see what the impacts are on customers. Are the products and services effective? Virraj also stresses the importance of third party perspective, such as the Money Advice Service within the nature of this competition, to agree or disagree that products and services are making a real difference.
What next for financial inclusion?Can competitions raise the profile of what can be done for financial inclusion? Do they give bigger organisations a boost and shine a light on what they could be doing for their customers? The team say yes. However, this is not the only solution. Tech City UK will continue to run competitions like this one and the Money Advice Service will continue to monitor the companies who took part in this one to advise and help them make the most of their platform to continually grow, experiment and make the best products and services for their customers, and to solve friction points in financial inclusion. Miles makes what is probably the most pertinent point about the future, stating that moving forward we're looking at integration of fintechs between themselves and with other organisation to create something "bigger than themselves" for the good of customers and to increase financial inclusion.
"[The future is] Working together with other fintechs to create something bigger than themselves" - Miles DeborahTo hear more from all the panel listen to the podcast in full or subscribe to Fintech Insider so you never miss an episode! For more information on the Fintech For All competition, visit Tech City UK's website.