Six takeaways from our Building Financial Inclusion Together conference

On 9 July, more than 200 guests from across financial services, community finance, public sector and third sector organisations gathered in London for Fair4All Finance’s first Building Financial Inclusion Together conference.

As well as speakers from organisations including Lloyds Banking Group, NatWest Group, Shawbrook Bank and Yorkshire Building Society, attendees heard from panellists with lived experience of financial exclusion, as well as a number of credit union leaders and experts from Fair4All Finance.

There was real optimism across speakers and attendees that plenty of solutions to financial inclusion are well within reach, and that the new Government will be receptive to them as part of their commitment to establishing a National Financial Inclusion Strategy.

We’ve picked out our six main takeaways from the day:

Collaboration is king

Throughout the day, there was acknowledgment that while individual organisations can have a positive impact on the lives of customers and people in financially vulnerable circumstances, fundamental changes in the way financial systems are structured are necessary to achieve impact at scale.

The participation of a diverse range of banks, insurers, charities and community finance providers, alongside the Financial Conduct Authority and HM Treasury, shows there is a true shared desire to collaborate to make those changes.

Attendees heard examples of newly formed collaborations, such as between a bank, a credit union and a local authority, while Cash Access UK, Iceland Food Club and other initiatives were given as existing examples of collaboration bearing fruit.

Attendees also reflected on the reality that collaboration isn’t always easy, and said that the best way forward is to start with an honest assessment of where collaborators’ objectives do and don’t align.

There was also a warning that charity and community groups, who are often the closest to unreached or financially vulnerable groups, can find it hard to get the funding to take part in collaboration.

The opportunity is big – and wide

Our new segmentation model, which was premiered at the conference, shows there are 20.3m people in financially vulnerable circumstances in the UK – that’s equivalent to the population of the Netherlands. We also know from LEK’s research that there is £2bn in unmet credit needs in the UK, that is potentially commercially viable to meet.

That is a huge market. Better serving the financially excluded is by no means a niche pursuit.

It’s also worth noting that a large proportion of these 20.3m people are in the relatively less vulnerable groups, meaning that it could be quite straightforward to design solutions and products to meet their needs.

But be careful not to think about these groups as homogenous – financial inclusion affects lots of different groups in very different ways, and not always the ones you might expect. It’s vital not to make assumptions about these, which leads onto the next point

Put lived experience at the heart and at the start

Perhaps the most powerful part of the day was the lived experience panel, in which three people with very real and very painful experiences of financial exclusion shared their stories.

It’s well known that understanding your customers is the best way to be a successful business, and the FCA’s Consumer Duty makes it clear that providers need to understand the impact they’re having on their customers.

Providers who make extra efforts to understand the lived experiences of those in financially vulnerable circumstances are therefore setting themselves up for success – and there was agreement that these insights need to be at the heart of more inclusive financial services offerings.

They should also be at the start – as one panel discussed, it’s no use bringing in a group of people with a disability or from a particular community in at the very end of a product design process. They should be engaged from the start to ensure they can give transformative feedback, rather than just rubber stamp an end product.

It was also noted throughout the day that more diverse and inclusive workforces would ensure that organisations could more clearly and inherently understand the needs of a range of different audiences.

There are already plenty of opportunities for potential quick wins

While there was significant focus during the day on systemic change and big picture transformation, speakers identified a number of things which providers could do, potentially quite quickly, to support customers.

This includes learning from measures already instituted by other organisations – as the saying goes, it’s sometimes better to replicate than innovate.

Integrating benefits checkers and income maximisation tools to ensure people can receive the support they are entitled to was mentioned several times. A number of tools already exist and can be integrated into a range of services.

There is also a clear hunger for the financial services sector to improve pathways for customers whose applications for a product are declined. This could mean signposting them to a community finance organisation or to a charity or advice agency – or directly to an income maximisation tool.

Other discussions included a desire for banks and insurers to improve wording on certain products to ensure they can be as widely understood as possible, and tools within products to help people improve their credit scores or manage their budgets.

There was also a suggestion from the day’s lived experience panel that offering four weekly payments or repayments for services would be hugely helpful to those with benefit income – currently, many products offer weekly or monthly, making it harder to budget.

Start somewhere and don’t expect to do everything at once

In a session on inclusive and accessible design of products and services, the panellists agreed that financial inclusion can feel like an intimidating objective – but that it’s important not to see the problem as simply too big to solve.

There was a consensus that it is unlikely to be possible to deal with all forms of financial inclusion in one go, and that organisations should avoid feeling like they have to have a coherent plan for the issue as a whole. If you do that, you’ll never actually get started with anything, panellists warned.

The better option is to remember that no community or disadvantage trumps another – some might be bigger than others, but there should not be a hierarchy.

The panel suggested that providers should get started in an area where you think you can make a difference, and once you’ve won hearts and minds internally, you can come back to tackle another issue.

Investing in community finance should not be seen as radical

A panel on encouraging and enabling investment in affordable credit began with the observation that a lot of products which we might think of as purely marketised, are in fact subsidised through tax incentives or other means – ISAs being a good example.

As such, investment in social purpose organisations such as community finance development institutions (CDFIs) should not be looked upon as somehow different, or a special case, just because those investments might include non-financial returns.

This panel also noted that it is well established internationally that microfinance is a good thing, because we can see a clear development value. At the same time, there is broad consensus that SMEs in the UK need access to finance to grow, and that encouraging this form of credit is valuable. So why is UK based personal lending to those excluded from mainstream lending not accepted and valued in the same way?

As the panel discussed, the sector is navigating this challenge and tackling the nervousness around APRs that ‘look high’ – ‘how do we get investors to Google ‘Michael Sheen APR video’?’” was the challenge posed – as well as showcasing the sector’s use of Open Banking and low bad debt rate.

So there’s lots to takeaway and lots to do

We know the journey to increasing financial inclusion is long, and one we can’t take on our own. All our work at Fair4All Finance is in collaboration with others and we’re thankful for the generosity and insight of each of our stakeholders.

Together we remain focused on creating a financial system that provides fair and affordable products and services to everyone who needs them. And making a difference to the lives of those 20.3 million people.

You can see more about our Building Financial Inclusion Together conference here.