# Financial exclusion: The end of the road   Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2021-03-23 Category: FINANCE Category URL: https://financedigest.com/category/finance Meta Title: How to End Financial Exclusion in 2022 Meta Description: Discover how prioritising women and minority communities and embracing open banking can help combat the impact of financial exclusion this year. URL: https://financedigest.com/financial-exclusion-the-end-of-the-roadhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/financia-lexclusion-1736838518835-compressed.jpg) _By **Matt Adam,** chief executive of We Are Digital, outlines four key actions we can take this year to end the impact of financial exclusion_ Financial exclusion – the inability to access finance, banking and income – typically tends to affect the youngest and oldest in our society most severely, as well as our more marginalised groups. Often closely linked to digital exclusion, financially excluded citizens tend to have limited internet access, which in turn forces them to pay more for goods and services. Financial exclusion has made it harder for millions of [consumers globally](https://www.financedigest.com/top-5-players-to-account-for-45-of-global-consumer-appliance-coatings-market-share-through-2031.html "Top 5 Players to Account for 45% of Global Consumer Appliance Coatings Market Share Through 2031") to access and manage their funds as the world has taken more and more steps away from cash. For banks too, financial exclusion is a growing problem as banks raise credit standards, reduce costly low-loan-value lending and reduce relationship [banking services](https://www.financedigest.com/major-myths-and-questions-holding-banking-and-financial-services-back-from-full-digital-id-adoption.html "Major myths and questions holding banking and financial services back from full digital ID adoption"). But there are strong developments being made to beat it worldwide – while there is even more that the financial [sector can do in the future when it comes to launching products and services](https://www.financedigest.com/protecting-the-uk-financial-services-sector-from-cyberattacks-now-and-in-2023.html "Protecting the UK financial services sector from cyberattacks now and in 2023") to lessen its impact. **Prioritise getting women and minority communities banked** Women are more likely to be unbanked than men. Indeed, they make up 55% of the world’s unbanked population. According to World Bank data (2020), 195 [countries have planned or adapted over a thousand safety net](https://www.financedigest.com/ecb-weighs-bigger-rate-hike-with-safety-net-for-indebted-countries.html "ECB weighs bigger rate hike with safety net for indebted countries") payments and other social protection measures in response to Covid-19, along with a focus on shifting payments from cash to digital. The rapid digitisation of [payments is likely to be challenging](https://www.financedigest.com/unfolding-the-great-payments-disruption-how-consumers-can-navigate-this-new-financial-world-and-how-financial-institutions-can-rise-to-the-challenge.html "Unfolding the Great Payments Disruption – how consumers can navigate this new financial world and how financial institutions can rise to the challenge") for groups that are typically marginalised and design, delivery and adoption support is essential. In India, near-universal ID coverage has made it possible to provide financial transfers targeted to women – more on the Indian ID system below. Women are also 21% less likely to own a [mobile phone – a tool that is critical for transferring money](https://www.financedigest.com/feature-africas-mobile-money-taxes-risk-driving-poor-out-of-digital-economy.html "FEATURE-Africa’s mobile money taxes risk driving poor out of digital economy"), community connection and networking and running a business, Mobile phone access is particularly critical to ending global female financial exclusion. In all social groups, older women tend to be marginalised when it comes to connectivity. Data on internet use from the English Longitudinal Study of Ageing (ELSA), for example, suggests that men aged 80 plus are more than twice as likely as women to be digitally connected – of course, financial and [digital exclusion](https://www.financedigest.com/digitized-exclusivity-to-be-the-epicenter-of-primary-peritoneal-cancer-therapeutics-market.html "Digitized Exclusivity to be the epicenter of Primary Peritoneal Cancer Therapeutics Market") are intrinsically linked. This is likely to be down to a mixture of knowledge, inclination and affordability, as [retired women tend to have lower levels of income](https://www.financedigest.com/financial-independence-through-passive-income-leads-to-a-happier-retirement.html "Financial Independence Through Passive Income Leads to a Happier Retirement") than men. BAME communities are also more likely to have lower overall levels of financial literacy, says UK money advice hub IslamicFinanceGuru.com. The website is urging policy makers to devote more research into the [factors driving](https://www.financedigest.com/insights-on-the-flexible-packaging-global-market-to-2027-key-driving-factors-and-challenges.html "Insights on the Flexible Packaging Global Market to 2027 – Key Driving Factors and Challenges") financial exclusion in BAME communities. [Products and services](https://www.financedigest.com/productivity-and-the-four-day-working-week-in-financial-services.html "Productivity and the four-day working week in financial services") targeting these groups specifically are essential to defeating exclusion. [**Open banking**](https://www.financedigest.com/why-open-banking-is-safe.html "WHY OPEN BANKING IS SAFE?") ![Matt Adam](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/maheadshotgrey-450x458-1736838518524-compressed.jpg) Matt Adam [Open banking data sharing schemes have huge potential to improve](https://www.financedigest.com/how-accountants-can-improve-financial-planning-and-results-through-open-banking-to-help-smes.html "How accountants can improve financial planning and results through Open Banking to help SMEs") the lives of low-income consumers globally, helping them to manage their debts and create additional income. When firms can access customer financial data held by [third parties](https://www.financedigest.com/why-a-replacement-to-third-party-cookies-is-key-to-post-pandemic-recovery.html "Why a replacement to third party cookies is key to post-pandemic recovery"), then creating savings, credit and financial management products, more suited to those stuck in poverty, suddenly become more viable. For those on the margins of financial services, it could reduce financial exclusion levels significantly – and indeed, in some communities, is already working. Brazil’s open banking regime reduces the high costs faced by low-income customers for [customer due diligence](https://www.financedigest.com/why-due-diligence-is-so-important-for-direct-debit-customers.html "Why due diligence is so important for Direct Debit customers") (CDD) procedures, allowing financial service providers to share registration data. Many of these solutions require smart phone access, which, in some markets, is not necessarily a given. In 2018, for example, just 45% of phone owners had smart phone access in sub-Saharan Africa. [Fintech innovation](https://www.financedigest.com/the-role-of-fintech-in-shaping-innovative-future.html "The Role of Fintech in Shaping Innovative Future") is key to tackling the issue on a wider scale. A number of start-ups have emerged such as Auden and Credit Kudos which are developing [services to assess credit risk more effectively among financially excluded customers](https://www.financedigest.com/how-can-financial-firms-improve-customer-service-after-the-pandemic.html "How Can Financial Firms Improve Customer Service after the Pandemic?"). Companies offering alternative [credit scoring](https://www.financedigest.com/12-things-that-dont-hurt-your-credit-score.html "12 Things That Don’t Hurt Your Credit Score") to provide a more accurate view of a customer’s current and future financial position also have a part to play – fully grasping a customer’s financial inclusion issues is, after all, essential to helping them. Low adoption [rates must](https://www.financedigest.com/must-know-facts-about-the-protection-class-rating-on-your-home.html "Must-Know Facts about the Protection Class Rating on Your Home") also be tackled, in encouraging customers to feel more comfortable using the technology going forward. **A [secure digital](https://www.financedigest.com/taming-the-new-wild-west-how-biometrics-can-help-the-ecb-deliver-a-secure-digital-euro.html "Taming the ‘new wild west’: how biometrics can help the ECB deliver a secure digital euro") identity** Across the globe, over a billion people have problems proving who they are – another critical driver of financial exclusion. In the UK, for example, analysis by Ipsos Mori shows poor financial awareness among BAME communities – something that can be strongly linked to identification issues. For those living in shared accommodation or as part of a family unit, establishing proof of identity without proof of address or a driving licence can be challenging. Biometrics are another solution. In India, the Aadhaar electronic ID system assigns a unique 12-digit ID number to every person, based on biometric and geographic data. In Norway and Sweden, programs set up by banking consortiums have been successfully [integrated into financial and government services](https://www.financedigest.com/integrated-finance-the-advantages-of-using-financial-infrastructure-as-a-service.html "Integrated Finance: the advantages of using financial-infrastructure-as-a-service"). The UK’s Digital Identity [Strategy](https://www.financedigest.com/why-an-orchestrated-digital-identity-strategy-is-vital-for-financial-organisations-in-fighting-fraud.html "Why an orchestrated digital identity strategy is vital for financial organisations in fighting fraud") Board believes that the digital identity market could add 3% to the UK’s GDP by 2030, provided delivery policy is strengthened to combat fraud and distrust. Biometric [data is classed as personally identifiable data and must be protected in accordance with data protection](https://www.financedigest.com/modern-data-protection-how-organisations-can-protect-against-cyber-attacks.html "Modern Data Protection: How organisations can protect against cyber attacks") laws such as the EU’s GDPR. Lack of official identification documentation affects 18% of financially excluded adults, [says the World Bank](https://www.financedigest.com/fund-nature-protection-now-or-face-huge-losses-says-world-bank.html "Fund nature protection now or face huge losses, says World Bank"), which has a goal to resolve this issue by 2030. Equally, 90% of [customer onboarding](https://www.financedigest.com/fraud-protection-why-customer-onboarding-requires-digital-identity-processing.html "Fraud Protection: Why Customer Onboarding Requires Digital Identity Processing") costs could be reduced by resolving this issue. (McKinsey Global Institute, 2019). [Close future collaboration between financial](https://www.financedigest.com/fast-track-financial-close.html "FAST-TRACK FINANCIAL CLOSE") services and governments is essential going forward to resolving this worldwide issue. **Community investment** Community investment must be at the heart of any financial training or fintech programme. The US community investment [industry](https://www.financedigest.com/future-of-the-finance-industry.html "Future of the Finance Industry") has a long history of successfully channelling financial capital into low-income, financially excluded areas – a success rate the UK is keen to emulate. In the UK, the community investment sector reaches roughly a sixth of the financially underserved who need more access to affordable finance, whether individuals or [small businesses](https://www.financedigest.com/best-small-business-loans-speaks-to-fundbox.html "Best Small Business Loans Speaks to Fundbox"). To allow it to flourish further, improved financial reporting and [social impact](https://www.financedigest.com/meet-the-founder-of-the-web-3-decentralized-social-media-metaverse-and-on-achieving-guarantees-of-green-for-a-proof-of-impact-future.html "Meet The Founder Of The Web-3, Decentralized, Social Media Metaverse; And on Achieving ‘Guarantees of Green’ For A Proof-of –Impact- Future") evaluation must follow. Access to in-depth data on financial services to disadvantaged communities is also key to [developing](https://www.financedigest.com/bridging-finance-for-property-development.html "Bridging Finance for Property Development") a more localised understanding of how financial exclusion is impacting the unbanked and underserved. _We Are [Digital is a social impact business](https://www.financedigest.com/impact-com-releases-the-partnership-economy-a-new-book-that-guides-businesses-to-success-in-a-digital-world.html "impact.com releases The Partnership Economy, a new book that guides businesses to success in a digital world") which has helped thousands of people access essential online services and manage their debts during the pandemic through its training work with housing associations, local authorities, banks and corporates._ --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---