The UK enjoys a low unbanked population by international standards of around 1 million according to the FCA. A range of banking sector measures successfully reduced the number of unbanked adults from 1.71 million as recently as 2014.
But concerns remain that a lack of diversity, increased regulation, and limited access to funding will impact the disadvantaged.
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A panel of fintech experts convened at the UK parliament at an event organised by think tank Parliament Street. Hosted by Dean Russell MP, they debated the role businesses should play in recruiting and building a more diverse fintech workforce along with the threat posed by AI to job creation.
Attendees also discussed the future of the fintech industry in the face of funding shortfalls. As RBI reported yesterday, VC financing is down this year, even in the US. This results from the conservative approach of investors amid market uncertainties including rising interest rates, inflation and recession fears. The decline also reflects investors’ aversion to commit high-value investments amid volatile market conditions.
Parliament Street diversity debate soundbites
“Educating young people on fintech and financial literacy is key. As the compliance space grows, not only the business but individuals themselves should be mindful of actions.”
Caroline Ruto, Head of Compliance at DKK Partners
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By GlobalData“Education is paramount in the financial sector. For example, developing an understanding of what sits behind an asset and knowing who the true owner is can be incredibly valuable.”
Fintech entrepreneur Aaron Carter, MD, Showpiece
“Diversity is challenging in finance and technology. We all know that diverse organisations perform better but it’s about taking action to solve it.”
Steve Hadaway, CRO, Encompass Corporation
“Giving students the opportunities to learn about financial technology is becoming more important and can help drive diversity inclusion.”
Dr Iwa Salami, Director, Centre of Fintech, of the University of East London
“Fintechs across the globe are experiencing turbulence within the regulatory landscape. The funding environment can also be difficult to achieve growth where some areas are oversaturated, but fintech is not dead.”
Jim McCarthy, EVP, Thredd
“We tend to judge things in tech and innovation as they are now. If we look at the change of the past 10 years, we can expect to see that in the next 10 to help put developments in perspective.”
Lamonas Noreika, co-founder and CEO, HeavyFinance
UK banking sector initiatives to promote financial inclusion
Recent FCA activity to support financial inclusion has centred on promoting access to cash. The FCA’s Financial Lives 2022 survey found that 6% of adults in the UK used cash to pay for everything or most things over the 12 months since May 2021. This figure increases to 9% for those in vulnerable circumstances. Another sector initiative relates to promoting basic accounts.
As of June 2021, there were over 7.2 million basic bank accounts open. A basic bank account is a specific account for those who have been unable to open a personal current account. While limited in scope, the account includes most of the features of a standard personal current account.
The UK government has said that it supports credit unions role in enhancing the financial wellbeing of local communities. Specifically, the government proposed legislation to allow credit unions to offer a wider range of products and services to their members.
The government has also allocated £100m of funding from dormant assets towards financial inclusion. This will allow Fair4All Finance, the organisation set up to distribute funding from dormant assets on financial inclusion, to explore ways in which the affordable credit sector can be scaled to facilitate the provision of loans to consumers in vulnerable circumstances.
In July 2022, the FCA published its final rules on its Consumer Duty. The Consumer Duty regulations come into force on 31 July. They are designed to enhance consumer protection in banking and deliver benefits for vulnerable customers at risk of financial exclusion.
