A new report from the UK group, the Payments Association, suggests that accelerating the fintech industry can play a critical role in supporting people in tackling the cost of living challenge. The report called ‘Navigating the rising cost of living – Payments innovation as a game-changers explore the cost of living crisis and poverty challenge within the UK. Fintechs and new payment solutions are considered vital support for customers during these difficult times and strengthen long-term options for people.
The pandemic and inflation impacts are outpacing pay rises, and many people, particularly those on lower incomes, are facing the financial squeeze. The report explains that UK fintechs are well-placed to alleviate this pressure. The industry generated an additional £44 billion for the UK economy in 2022, a 20% increase compared to 2021.
This growth is mainly due to the development of new payment solutions and tailored options for saving, borrowing and managing money, which alleviates a traditional banking system that is more expensive and less accessible to those on lower incomes. The report identifies groups requiring more assistance, including people on lower incomes. It includes several market solutions that are available to support these particular groups, including:
-Open technical standards for the government’s social payment system
-Creating a rulebook highlighting how government payments operate
-Funding for social sector-driven payment innovation
-Developing a platform for sector concepts and insights into the financial lives of those in need
-Reconnecting housing associations with regional financial support services.
Payments innovations can strengthen the financial capabilities of people, make them more resilient to financial challenges and improve long-term financial security. Pooja Bhachu, the director of public policy at Mastercard and lead for project inclusion at the Payments Association, emphasises that industry and policymakers must work together to support this innovation. Enhancing access to digital finance services, delivering new inclusive services and strengthening the regulatory conditions for fintech facing these social issues are all necessary factors.
Neil Harris, chair of the Inclusion Foundation and part of the Payments Association Advisory Board, believes industry and policymakers must work together to enable and improve access to digital financial services and take action to involve people impacted by financial exclusion and the ongoing cost of living crisis. Harris explains that the report will enable ongoing discussions and accelerate action plans.
The Payment Association’s intention for Project Inclusions is to educate and collaborate with government, regulators and third-sector groups to strengthen clarity on innovations and payment solutions that reduce financial exclusion and poverty. The process is partnering with industry groups, generating thought-leadership campaigns and supporting regulatory and legislative decisions.
