Europe Insights Intelligence

New Insight From EPA on How Fintech Can Tackle Financial Exclusion

Earlier this week the Emerging Payments Association (EPA), which promotes collaboration and innovation across payments,  published a new paper that shows the serious problem of financial exclusion in the UK and how innovation in Fintech can allow people to access affordable credit.

This comes at a time when over 10 million adults in the UK cannot access affordable credit, often because of low credit scores or badly designed credit products. However, new financial technology, most notably inclusive credit, can offer a way out of precarity for millions of people.

Having endured a year since the start of the COVID-19 pandemic and the economic hardship it entailed, the UK looks set to rebound as Chancellor of the Exchequer Rishi Sunak revealed his 2021 financial budget. Undoubtedly, many citizens of the UK are worse off than they were this time last year, and with insecure incomes, a job that has been furloughed or no job at all, many people are turning to credit to cover monthly expenditure against income losses. However, the current market does not cater for this increase in demand – instead, over 10 million adults cannot access affordable credit, a problem known as financial exclusion.

The credit arena has not seen enough innovation, and due to consumer protection regulation and an uncompetitive market, consumers are forced to turn to high-cost credit (often so-called ‘payday loans’), which can trigger a spiral into debt, with 14.2 million people currently at risk of ‘problem debt’. However, the report ‘Low-Cost, High-Tech Credit: Solving financial inclusion through innovation’, released today, seeks to inform policy-makers and the regulators across the Fintech and payments community about the difficult challenges consumers are facing, whilst also highlighting some of the inclusive Fintech companies who are helping them.

Insight for the report was collected through 10 in-depth interviews with industry stakeholders from charity organisations, Fintechs, credit providers and academic institutions and is split into four key sections:

  1. Consumer Credit: Highlighting why people use credit, why it costs the consumer so much right now and how the lack of tailored credit products, both in product design and the business models of providers, is a definitive cause of financial exclusion.
  2. Financial Exclusion: Explaining why people cannot access credit and can therefore fall into problem debt. It also details the harm that this high-priced credit and financial exclusion can cause.
  3. Inclusive Fintech: Fintech firms are well-placed to shake up the market and make affordable credit available to millions more people. The report showcases key areas of innovation, including improved customer data, new means of assessing and decreasing risk, inclusive product design and alternative business models.
  4. Market Overview: Exploring several Fintech firms disrupting the credit landscape today. These firms are innovating in areas like credit building, using open banking to assess lending risk and buy now, pay later schemes to enable lower cost and risk for both parties.  The report also seeks to provide a market overview of the Fintech firms that are well-placed to shake-up the market and make affordable credit available to millions of people.

Tony Craddock, Director General of the Emerging Payments Association, commented: “With the industry changing at pace, it is important we don’t leave people behind. We have already seen many turning to short-term credit sources to make ends meet through the pandemic. However, whilst the demand for affordable credit has increased, supply has diminished. Our industry must adapt its products to fit in with people’s lives rather than having products that leave many behind.”

Josh Berle, Business Development Director, Mastercard, and Lead of EPA Project Inclusion, added: “We’re excited to have produced this important assessment of the market for affordable credit – which is more important than ever given current economic circumstances. I’m particularly proud that Project Inclusion has been able to mobilise over the past year to add critical value in such a range of related arenas despite the impact of the pandemic on our prior working practices.”

EPA’s Project Inclusion aims to drive industry activity to address financial exclusion and to provide clarity on Fintech innovations and solutions that reduce financial exclusion. This report is part of Project Inclusion’s work programme, seeking to highlight examples of best practice by payment firms and by encouraging others to think and reflect on how they can support these groups at risk of exclusion.

You can download a copy of the report here.


  • Gina is a fintech journalist (BA, MA) who works across broadcast and print. She has written for most national newspapers and started her career in BBC local radio.

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