BLOG: Lord Holmes - Fin, Tech the opportunity

July 11, 2017


I hardly need say to you folks that financial exclusion has blighted Britain for decades too long.  Individuals held back, communities constrained and a nation, not what it could, or should, be.

Enter Fintech as a promising part of a sustainable, secure solution.   Don’t worry about the technology behind it, who cares how the microwave cooks our tea so long as it does and it does it safely, reliably, in a way we can agree fits with the rest of our lives.

Last week I was fortunate to lead a debate in the Lords on Fintech’s potential to increase financial inclusion, broadly in three key areas:  identification, access to bank accounts and services and access to credit.  Fintech can disrupt and solve problems where others, not least the traditional players, have just treated issues as too tricky, too risky and best just to answer with a non-negotiable NO.

But, ah, as so often in life, there is an IF, the IF in question concerning inclusion and funding.  At the individual level, millions of individuals under or unbanked, suffering at the sharp end of financial exclusion.  The DWP have been involved with  some successful ‘proof of concept’ tests to benefits payments. One producing a system using distributed ledger technology and smart phone application, that has the integrity of a very expensive centrally protected account record yet costs a fraction to build and run. Another solution uses prepaid technology for welfare recipients and offers a route into the financial system without a need to open an account or pass a credit check.  

The recipients gained greater control over their finances, were able to secure better deals on their services, not least power and, perhaps most significantly, became not passive recipients but partners in the project, coming up with improvements for the programme.  I welcome these initiatives and firmly believe that the effort for applying Fintech solutions to promote financial inclusion must be cross government, and extend to local and devolved government, as well as the regulator.

There’s a real job of work for our first Minister for Financial Inclusion.  I believe if Fintech is fully embraced, alongside all other elements, we may finally be able to see the sustainable end of the shame on us all of financial exclusion.