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How can we make financial services more inclusive?

Most people's financial services journey starts with their bank. It's their first foray into buying more financial products like mortgages, insurance, loans and investments and possibly seeking advice. But what about the 1.7 billion adults who remain unbanked? That's a lot of people who are missing out on all the good the industry can bring. And let's not forget the surprising amount of people who want or need access to financial services, but struggle to perhaps because they aren't financially literate or lack the basic digital skills to do so.

Fintech is helping make financial services more affordable and easier to access, but is it also creating new barriers where old ones have been torn down? Governments want a solution to the financial inclusion problem and there are smart people working on it, but what exactly is the solution?

One of the people working on the front line of financial inclusion is researcher, policy adviser and professor of fintech Dr Karen Elliott. She joined the Upfront podcast to talk about building accessible, inclusive and ethical financial services that more people can love.

Here’s just some of what she had to say. Listen in full here or wherever you get your podcasts.

If we really want financial inclusion, we've got to tackle our own bias

So let's go. Dr. Karen, How can we make financial services more inclusive?

Dr Karen If we really want to make financial services more inclusive, we need to recognise that it's not all about profit, that people are supported to do good, to make it more financially inclusive, to really pay proper attention on authenticity to inclusion.

Do you think financial services businesses see themselves as inclusive?

Dr Karen People want to say yes because it’s good PR and it looks good for their reports, but is it authentic? Question mark. There are lots of ethical principles out there - this is what you should do etc but moving to the how is more difficult. It’s taken me over a year to find a company that’s doing it properly.

Is tech helping inclusion or is it creating more barriers?

Dr Karen Technology is great but if it's just codifying what we've always done, why would you expect a different outcome? This is what I'm passionate about - looking at the social aspects that feed into exclusion and what we need to do to break the barriers. If we really want financial inclusion, we've got to tackle our own bias because we make judgements all the time and that's just codified into our data sets, which are then used for training and machine learning, which then gets aggregated up to AI and automated, and without human oversight, guess what, you're still going to get exclusion. So we need to look at the data, systems and processes and how we transform it to make sure that we've got a bit more of an equitable digital society for everyone.

Nobody will accept the slower rate of profit to really dig into these big financial problems.

Maybe we should ask ourselves the awkward question - when is purpose going to get a bit higher on that balance or continuum?

Why do you think financial inclusion is such a tricky problem to solve?

Dr Karen It’s what I would call a wicked problem. No one's a real expert in this. People have got expertise and we link together to make an expert experience. We can get good practice, adapt it for maybe a cultural difference in that area and get it to work to drive inclusion. That's how I would like to see it working. We're not quite there yet, but there are lots of people like me who are also passionate about the issue. If we work collectively, we can achieve it. No one person can do it.

Where do you see businesses struggling with their efforts to be more inclusive?

Dr Karen The problem is investment in it. Investment is driven on the understanding of profits. Once you get successful, your investors want you to scale up, want you to be more profitable. And how are you more profitable? You need a bigger market, which then leaves the problem of how do you address financial inclusion. Because nobody will accept the slower rate of profit to really dig into these big financial problems. And even though there is a solution to digital financial inclusion, you've still got to get people connected first. So we’ve still got the problem over here of how do we get people access to the digital even? We saw that in lockdown. Children crowded around one small phone to do their education. That's not how it should be in the 21st century. But these are complex and wicked problems, and the only way we solve them is by real stakeholder engagement and understanding the lived experience.

Who do you think is going to take a lead on this?

Dr Karen I think if someone can do it and make a business out of it, then we can share it. Does it have to be a full business model? No. The smart entrepreneurs know when to pivot and where true engagement is, but we always come back to this profit vs purpose motive and the tension, the tradeoffs between it. Maybe we should ask ourselves the awkward question - when is purpose going to get a bit higher on that balance or continuum? Is it all right just dipping the proverbial toe in the purpose bit saying, oh well, we’re green investors, so tick that box? They're not nice questions for leaders to ask.

How to build a financial services business that’s more inclusive

There are all sorts of factors that people just need to get a grip of and go, okay, cool. If I want to change the world, this is what I need to do.

Are you optimistic about financial inclusion improving?

Dr Karen I am optimistic because I'm starting to see different organisations come up with good intent. There’s the Digital Poverty Alliance and the Good Things Foundation - Mastercard are funding them so we've got big financial companies changing and opening their their portfolios and thinking about where we need to go. You've also got the Financial Inclusion Association in the UK who are trying to pressurise and lobby for government to say if you really want to level up, these are things we need to address. Technology can drive it, we just need to think a little bit out of the box. Will our profit margins be as big? No. Can we handle that? Yes. Can we still deliver? Yes. Let's go. It sounds easy, but there's all sorts of factors that people just need to get a grip of and go, okay, cool. If I want to change the world, this is what I need to do. If we get more innovation, then I think we are pushing towards true financial inclusion and the emphasis is on true financial inclusion, not just lip service.

What’s your advice to help businesses become more financially inclusive?

Dr Karen Start with a problem that you see with the system from a human perspective. Don’t just build it in in yours or my vision. Look broader and say okay, where are the problems now? People like me are catered for, who’s not? If you haven’t got the knowledge, find someone who has. Then we can actually say hand on heart that we are pushing for financial inclusion by using finance for good. Balance your purpose and your profit - that’s the trickiest part. It’s chicken and egg. You need some money and some capital to develop and scale up, but do you sell your soul for profit or do you actually stick to the purpose of wanting to do great things with tech?

Do you sell your soul for profit or do you stick to the purpose of wanting to do great things with tech?

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