Heather Grant, Senior Manager Digital Inclusion at Lloyds Banking Group, reflects on the role digital can play in reducing financial exclusion following her participation in an Innovate Finance panel.
Lloyds Banking Group is one of the founding partners of Innovate Finance, a membership organisation that convenes UK FinTechs to discuss the challenges and opportunities of the financial services sector and how technology could unlock solutions.
I was delighted to sit on a panel at their event entitled ‘Financial Inclusion – how can FinTech rise to the challenge?’ to discuss one of my passions – the role of digital in generating both economic and social benefits for individuals. We have made a commitment in our Helping Britain Prosper Plan to take a lead in Financial Inclusion and publicly committed to accrediting 4,000 Community Support Workers to deliver financial education, and to having 20,000 colleagues volunteering their time as Digital Champions by 2017. But why do we think this will make a difference?
Our Consumer Digital Index shows that digitally capable consumers can save, on average, £744 per year through using online tools and services. They also have increased financial resilience as they save more money, and save more frequently than those who are less digitally capable which makes them better equipped to cope with any unplanned financial strains. But we know that there are still 12.6 million adults in the UK without Basic Digital Skills so helping these people to get online could make a real difference to their financial health – this is where our Digital Champions can offer invaluable support.
There are also over 1.5 million people without a bank account in the UK. Even though many of these individuals are digitally capable, they are not able to benefit from the deals that can be found when shopping online as they don’t have any bank details. Toynbee Hall supported our Consumer Digital Index by interviewing people without a bank account who told us that most live their lives through relying on cash, pre-paid cards or borrowing the bank details of friends and family to buy online. They all wanted to open an account as they saw it as an essential part of a secure future but for a variety of reasons, this was not an option. This is where FinTech providers are increasingly playing a key role.
I was joined on the panel by three CEO’s of FinTech organisations – Pockit (pre-paid cards), RateSetter (peer-to-peer lender) and Credit Kudos (uses real-time spending data to build a transparent credit score-card). Our discussion focused on different aspects of Financial Inclusion, such as the fairness of existing credit scoring mechanisms; current ID&V (identity and verification) requirements and the role of Big Data in improving transparency.
Last year we launched online eligibility checkers to enable customers looking to switch their current account, to shop around for a new account without affecting their credit file. The online tool also provides people who may not currently qualify for a current account or overdraft, access to personal finance guides which offer tips and resources to help improve credit scores.
As our panel discussion progressed, what became clear was that all of our organisations are driving towards the same goal of reducing financial exclusion but we recognised that we could all have a greater impact by working together to achieve the best results for customers. We also agreed that digital technology has a vital role to play and I was genuinely inspired by some of the fantastic examples that were shared during the event.
I truly believe that digital can be the key enabler of our century and we have a responsibility to ensure that nobody is left behind – that is where financial and digital skills training must be an essential part of the solution.