Financial Inclusion – It starts with challenging our assumptions

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Financial Inclusion in the UK – a live issue with a rapidly growing profile on the regulatory and c-suite agenda

We define Financial Inclusion (FI) as appropriate, accessible, affordable and attractive financial products and services accessible to the entire population, delivered via a customer-led experience and robust framework.

It’s tempting to make at least three assumptions around Financial Inclusion: that it only concerns ‘marginalised’ demographics; that there is not much we can do about it; and that it occurs exclusively in remote and emerging economies. We can challenge that last assumption with hard data. As the numbers cited below confirm, financial exclusion is sadly alive and thriving, right here in the UK in 2016:


  • 2 million people do not have a bank account.
  • Almost 8 million people are over-indebted.
  • 8 million people are unable to access mainstream credit.
  • 3 million households in social housing lack contents insurance.
  • People on benefits borrow an estimated £330 million a year on home credit, paying £140 million in interest.


The numbers also make it clear this is a far from a marginal issue. A substantial proportion of the UK’s adult population shows one or more of the ‘symptoms’ of financial exclusion. The debt trap/poverty cycle is much easier and faster to fall into than can be imagined by more affluent citizens. Which leaves our remaining assumption - that nothing can really be done. This is certainly not the view of the regulators. Any Chief Risk Officer (or anyone in the C-suite) will or should know this much. The Financial Conduct Authority – FCA - has for some time emphasised the importance financial institutions must now attach to removing obstacles to inclusion. This emphasis is more than fine words. It has regulatory teeth too, as any finance professional who has lived through the Section 166 process will confirm.


The next inclusion milestone: A major new regulatory paper on access to financial services

On May 24th 2016, the Financial Inclusion Commission and the Financial Conduct Authority are launching the FCA’s Occasional Paper on Access to Financial Services. Capco will be attending the launch event. Shortly afterwards, we’ll be offering our thoughts on the implications of the Paper, both for financial institutions and the financially excluded. We’ll also be suggesting a range of strategic perspectives and operational initiatives that institutions can consider. These will engage with the challenges of compliance and highlight opportunities for the financially excluded.

This includes practical and probing questions on key issues of digital access, bank account access and ease of switching, availability of appropriate insurance products and on-boarding in the context of identification and verification challenges. These are the policy and practice inflection points of transforming Financial Inclusion from a desired state into a delivered reality. Even ahead of the Paper’s launch however, we believe that senior executives can focus productively on a clear and robust approach to Financial Inclusion.


Introducing The 4 A’s of Financial Inclusion

As the illustration shows financial services that deliver true inclusion have four core characteristics.




Appropriate, so that they offer realistic, relevant ways in to the financial mainstream.

Accessible, so that currently marginalised customers can gain access.

Attractive, so that marginalised customers engage through choice not constraint.

Affordable, so that they can become a sustainable part of marginalised customers’ lives.


Immediately following the launch of the FCA’s Occasional Paper on Access to Financial Services, we’ll be looking in more detail at how the Four A’s of financial inclusion can be implemented in operational practice.


There are so many good reasons to include Financial Inclusion on the C-suite agenda

There can be no doubt that in the continuing fallout from the last financial crisis expectations on financial institutions to adopt a fairer and more inclusive approach are high.

Inclusion is rapidly assuming a compulsory dimension. Offering financial choices is no longer a matter of individual institutional choice. There is a third dimension to the debate, one that is often overlooked. A financially inclusive approach is good business. After all, where else in a hyper-mature market such as the UK will we find two million potential new customers?


About the Author

howard taylor

Howard Taylor is a Senior Consultant with the FRC practice at Capco. He has extensive experience in the post-crisis regulatory environment, having worked on both s166 engagements ‎as part of the skilled person team and in-house at a Tier 1 UK bank. Howard is also a trustee of a financial inclusion charity.


The content and opinions posted on this blog and any corresponding comments are the personal opinions of the original authors, not those of Capco.