UK fintech businesses are creating a path for a more diverse and inclusive financial market. New studies have explored how financial leaders like Mastercard are supporting a new wave of fintech businesses to strengthen access to financial services and reduce the financial inclusion gap.
A new wave of fintech businesses has disrupted the traditional financial industry, launching new products and solutions to satisfy the changing requirements of today’s customers. This transformation has generated significant changes in the delivery of mainstream financial services and placed the UK as a leader in fintech. Aside from emerging and innovative tech supporting customer demands, it enables inclusive growth by strengthening access to financial services for many previously underserved groups.
The UK payments industry has been a driver of innovation for years, and domestic fintechs are transforming finance, supporting underserved groups, strengthening the national economy and enabling businesses to grow. The need for innovation to strengthen financial inclusion has never been greater. Currently, 13 million people in the UK experience financial inclusion, with over 1 million lacking access to a basic bank account.
Tulip Siddiq, MP and Labour shadow city minister, believe the focus should be on innovative UK startups reshaping the financial landscape. These businesses can reach groups that have struggled for access in previous years.
The UK fintech industry can play a critical role in providing solutions to traditional problems, like financial exclusion and wellbeing. To facilitate the development of products focused on exclusion, businesses like Mastercard, are working with fintech partners that address the needs of the underserved and assist individuals looking for products that match their beliefs and values. Start Path, is part of Mastercards’ commitment to bring one billion people into the digital economy by 2025. The initiative has developed multiple solutions, like better use of data for credit decisions and more visibility of personal finances. The foundation for fintech to transform delivery is already there, with a progressive fintech industry leading the way in both innovation and social purpose. The key to financial inclusion is creating an active and competitive fintech market, where authorised businesses are competing for customers across a broad range of groups related to age, income and technical capabilities.
The recent Future of Payment Review suggested that while the financial inclusion policy plan has brought more people into banking, more must be done to explore whether digital exclusion is driving financial exclusion. This is something many market leaders have emphasised, highlighting the link between digital and financial exclusion to be embedded into new policies. For example, introducing the national financial inclusion strategy alongside a national plan to support people of all age groups with the necessary digital financial skills. Mastercard is keen to introduce a National Fintech Strategy to deliver long-term support for the next-gen of fintech, especially those with a social purpose.
Innovation is creating opportunities to expand the reach of financial services to assist customers who may have struggled in previous years. Businesses like Mastercard will continue to play an important role, but more innovation will require further action from the government and regulators.
With millions in the UK struggling to access financial services, the requirement for a cleaner strategy and coordinated action has never been greater. By utilising the potential of technology, there is the opportunity to support people and reduce the financial inclusion gap.
Innovation and technology have created a new gen of companies that are agile enough to react to the ever-changing needs of the diverse customer. Algebra, for example, is a UK fintech solution focusing on delivering ethical and inclusive banking services. Enabling customers to monitor their spending impacts on the environment and offset their carbon footprint, Algebra is the only Sharia-compliant fintech with FCA registration in the UK. This creates card payment for a large group that has historically struggled to access financial services that meet their culture, beliefs and values.
Another business supporting financial inclusion is Sibstar, a debit card and app enabling families living with dementia to securely manage their finances. The Sibstar card allows people with dementia to safely manage their financial independence and maintain financial freedom.
