Banking the unbanked: where fintechs can provide support

Today, people have access to various innovative applications, products, and services to manage their finances – doing everything from simple tasks like checking bank balances to more complicated endeavours like investing. 

But even as new fintech innovations and challenger banks have swept in to provide more choice when it comes to money management, many individuals in the UK remain ‘unbanked’ – they can’t get access to traditional banking services. These households are pushed to use high-cost alternatives for their transactional needs and may be hindered by a lack of access to credit when they need it. In turn, this can have a severe impact on their financial wellness and overall welfare.

According to research from the Financial Conduct Authority (FCA), the unbanked population in the UK amounted to 1.2 million adults in 2020, while many more are heavily reliant on cash and unsuitable financial products to get by.

Particularly now, as the cost of living remains high, banks, fintechs and businesses branching out into the world of financial services have a duty to provide new solutions that meet people at the point of need and foster greater financial inclusion. 

Here’s why…

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Customer-centric solutions

Ultimately, all customers have unique financial requirements, so a one-size-fits-all approach to product development will never be the most effective in delivering against their needs. 

Solving financial exclusion and ensuring that people who currently use financial services never find themselves locked out of the banking ecosystem means engaging with consumers directly – harnessing data and completing primary research to build an offering that truly fits their customer needs. 

Today, banks and fintechs can capture a wealth of data to refine their products and develop new features. For example, looking at product utilisation in different demographics, as well as the contexts in which certain products are used, can make all the difference when delivering targeted solutions. 

Likewise, financial support should be made-to-measure. This means interactive financial education and tools integrated seamlessly into the user experience – for example, the ability to flag repayment problems before a customer goes into arrears or personalised ‘nudges’ that highlight both positive and negative financial behaviour. These solutions go far beyond the standard resources offered in banking applications, taking proactive steps to bolster financial literacy and well-being.

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Why partnerships matter

Most fintechs today have a ‘better together’ mentality – the idea that they can create something truly meaningful by working with complementary charities, non-profits, and institutions. 

These collaborative initiatives allow fintechs to do what they do best – putting their technology and financial expertise to good use with the guiding hand of expert organisations like the Good Things Foundation and The Financial Inclusion Commission, who can provide a fuller understanding of the behavioural and social contexts of the un- and underbanked. With this knowledge, banks and fintechs can pilot new ways of supporting affected people and raise awareness so that nobody is left in the dark.

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