Intellect Global Transaction Banking Announce It Will Use Cloud Technology as It Launches in the UAE
Editor's Choice Europe Fintech Open Banking

Open Banking Excellence on Financial Inclusion: Fintech and Open Banking to the Rescue

With around 1.7 billion adults still unbanked at the world level, financial inclusion is a topic that should be very close to everybody’s hearts. From rich countries to poor economies, addressing financial inclusion can boost growth, reduce poverty, lower inequality levels, and help entire industries prosper. 

Dr Giovanni Caccavello, Head of Blog Content at Open Banking Excellence and a PhD researcher in Strategic Management at Strathclyde Business School. Here he shares his thoughts on financial inclusion and open banking

Dr Giovanni Caccavello, Head of Blog Content at Open Banking Excellence
Dr Giovanni Caccavello, Head of Blog Content at Open Banking Excellence

At Open Banking Excellence we have always believed financial exclusion to be a fundamental challenge that needs to be tackled by the wider fintech sector if it wants to both evolve further in the next decade and be finally seen as a key enabler for lower-income people to grow up their own economic ladder. It is not a coincidence that our first-ever Campfire, which took place in November 2019, focused specifically on this issue.

Forever true to our corporate values, on the 17th of June 2021, we continued to fly the financial inclusion flag, holding a new Campfire that investigated how the wider fintech sector and new Open Banking-powered solutions and technologies can help improve people’s lives all across the globe. We were honoured to have Lord Chris Holmes of Richmond as our Campfire guest host as well as Ron Kalifa, OBE and Kelly Devine, President, UK & Ireland at Mastercard as key speakers. It was also a pleasure to see many other Open Banking and Open Finance experts joining the conversation to discuss financial inclusion and how they see change being achieved.

Many have seen the issues covered during the Campfire: from the importance of tackling financial inclusion properly both in the UK and globally, to how Open Banking-powered technologies and solutions can help tackle this key worldwide challenge. 

Ron Kalifa OBE, said: “Technology has a massive role to play here and legacy systems shouldn’t be a constraint for the future. Partnering between fintechs and incumbents can forward financial inclusion – and the time is now.”

Too often, people in developed economies like the UK think financial inclusion to be a problem primarily linked to under-developed and emerging markets. This cannot be further from the truth. Reality tells us that even in an advanced and industrialised country like Britain, with a GDP per capita of over £42,000, 1 in 5 adults would not be able to cover more than one-month expenses if they lost their source of income, 1 million people do not even have a bank account, and 22% of all adults in the UK have less than £100 in savings. 

On top of this, as the UK gradually re-emerges from the COVID-19 crisis, it is important to highlight how the pandemic has hit younger generations, who are usually more vulnerable than older people, the hardest. As recent research from Credit Kudos reports, under 35s are nine times more likely to have been turned down for borrowing since the pandemic began, with 18% of adults aged 18-34 saying that they have been turned down for credit since March 2020, compared to just 2% of people aged 55. Due to lockdowns and restrictions, the pandemic has put millions of people under further financial strain. Research from other countries suggests a similar situation.

Kelly Devine, President, UK & Ireland at Mastercard and keynote speaker at OBE Campfire said: “The next few years will be a tipping point for Open Banking. We’ll need to work on public trust, especially around sharing data. This is the barrier that we need to overcome. There will have to be collaboration to manage some of the fraud risks. We have to get this right if Open Banking is going to take the next step.”

With many economies not returning to pre-pandemic output levels until the end of 2022 or early 2023, Open Banking-powered solutions can indeed help improve people’s financial lives both in rich and developing markets. From credit scoring services to more advanced saving trackers tools, from lowering tariffs on utility bills to income smoothing, Open Banking now has the opportunity to start supporting millions of people in many countries to manage their finances in a healthier way. 

Whilst dealing with the element of purpose is not an easy task for any organisation, fintech sector leaders have a duty to find a balance between their need for profits to survive in an ever technological, innovative and competitive banking landscape and the importance of helping the unbanked, the excluded and those people that might struggle with smartphones and new digital products. As both our Keynote speakers suggested during the Campfire, at this stage, with Open Banking becoming a truly global phenomenon, the collaboration between incumbents and fintechs is more important than ever to fight financial exclusion.

Author

  • Polly is a journalist, content creator and general opinion holder from North Wales. She has written for a number of publications, usually hovering around the topics of fintech, tech, lifestyle and body positivity.

Related posts

The Top Ten Largest Banks in Israel 2020

Richie Santosdiaz

DailyPay: What The Recent CFPB Compliance Regulations Means for Earned Wage Access

Polly Jean Harrison

Global Remittance Market is Expected to Grow by $200 Billion by 2026

Polly Jean Harrison