Financial inclusion in a digitised post-pandemic world

15 November 2021

Marion KingDirector of Payments, NatWest

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NatWest recently sponsored SIBOS, a global financial services networking event organised by SWIFT, where we participated in a session that focused on precisely this topic. We summarise some of the key insights from that discussion below.

The link between financial and digital inclusion

According to Marion King, NatWest Group’s Director of Payments, the pandemic showed there’s a strong link between financial inclusion and digital inclusion. Those who are digitally excluded really suffered during lockdowns. Even though NatWest helped many people move to online accounts, it was still very difficult for some.

While many people use smart phones to manage their finances, over a third of people in the UK are still not comfortable using the internet for important financial matters, even if they have access to it. This fear has been exacerbated by a sharp rise in fraud.

All this has shown us that financial service providers need to focus on those with little access to digital technologies. For example, NatWest has launched a debit card for carers, enabling them to spend for people who can’t leave their home. This is driven by the belief that focusing on digital inclusion will support financial inclusion – the two go hand-in-hand.

How the changing role of cash affects financial inclusion

Marion also pointed out that cash is still vital for the UK economy: a year ago, the volume of cash used in the UK plummeted, but by August 2021, they were back to 2019 levels – which was unexpected. At least a million people are dependent on cash as they don’t use digital payments. Cash is clearly still very important – and providing access to it is therefore vital: banks have a duty to do so, even though it’s important to reduce the costs and risks of physical money.

It’s also important for banks to think outside the box to meet their customers’ varied needs. During the pandemic, for example, NatWest partnered with a security company to physically deliver over £2 million to its most vulnerable customers. The bank is also looking at means other than ATMs – such as shops – to make sure cash is readily available to everyone regardless of how remote their location.

Government policy has been very influential in some cases. Likhit Wagle, General Manager, Global Banking at IBM Global Markets highlighted the government of India’s demonetisation efforts, which significantly reduced the volume of cash in circulation. People were forced to find other ways to transact. For example, fruit sellers on the side of the road are now using their phones rather than cash to accept payments. What’s more, the government insists all subsidies it provides to citizens must be deposited into a bank account, which has helped drive financial inclusion in the country.

The pandemic boosted financial inclusion in some emerging markets

Elsewhere in emerging markets, the pandemic has had a huge – often beneficial – impact on financial inclusion. Gustavo Costa Tayer of McKinsey highlighted the government of Brazil’s emergency aid programme, which required recipients of monthly assistance to register with a bank. As a result, the proportion of people with bank accounts increased from around 75% to 90%.

According to Michelle Swanepoel from Standard Chartered Bank in South Africa, the pandemic accelerated digital adoption across the African continent, enabling large numbers of previously disadvantaged individuals and small businesses to access financial services and products that were previously reserved for institutions.

Three ways to improve financial inclusion: education, remove biases, cut fraud

Michelle explained how education is crucial (but often lacking) for cultivating the right mindset for saving and investing. Investment products need to be simple and investors need to be able to identify with them. But more importantly, people need to understand why it’s crucial to save and invest for the their future – which only comes through education.

“We need to ensure there’s collaboration across the industry and between industries. We need to work on digital inclusion, which in turn leads to financial inclusion. And there has to be a focus on stopping fraud.” Marion King, NatWest Markets

Likhit pointed out that some consumers still can’t access financial services because they’re screened out by an algorithm. As more decisions become automated through artificial intelligence, like whether someone is taken on as a customer or given a mortgage, it’s becoming more apparent that algorithms are biased. In the US, for instance, it has been shown that claims approvals in the insurance industry were biased against African Americans, and that this bias was built into the algorithms that insurers use.

Finally, Marion discussed how fraud is a major problem and needs to be tackled more rigorously. Whenever there’s a data breach, there’s fraud downstream as criminals can access the data and use it to impersonate others. Real-time payments in particular are vulnerable to scamming as they’re irrevocable.

Digital identity – and the technologies that enable it – are very important in the battle against fraud. Banks need to be stronger guardians of the payment, and that will mean saying no in some circumstances and making it clear what risks consumers and businesses are taking. Tech firms have a role to play, but big businesses that suffer data breaches must be accountable – and there must be cross-industry collaboration in mitigating them.


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