More than 138 million Europeans are cut off from the formal banking sector due to lack of knowledge and mistrust of the banking sector, according to a new study by MasterCard.

The report, which indicates that financial exclusion is not just an issue for the developing world, also stressed that road to financial inclusion goes through the digital channel.

Findings from the new research further points out that approximately a third (33%) are employed full-time and 35% are aged between 18 and 34.

About 87% of the financially excluded people, who participated in the survey, have resided in the same country their whole lives.

The report also underlined that 38% pay their rent in cash and, incredibly, 88% of those surveyed pay for all of their other amenities in cash.

Despite proving that cash is still king among the Europeans excluded from formal banking system, increased proliferation of technology is also visible among them.

According to research, access to technology through smartphone has gone up from 29% in 2013 to 49% in 2016.

Nevertheless, a quarter (27%) still find they are unable to access financial products and services, highlighting a definitive disconnect between those using technology and those accessing financial products and services.

MasterCard president international Ann Cairns said: “For many people the concept of exclusion is often seen as a developing markets problem but today’s report shows clearly that this is as much of a problem in the perceived developed markets of Europe as it is around the world.

“Exclusion has a serious impact on a person’s quality of life, denying them basic benefits and choice including increased protection, convenience and access to the global economy.

“That the tools and technology are readily available to those who are in need of inclusion demonstrates that this is a solvable problem and one that partnership, education and innovation can easily solve.”