During a year when everything moved online, FinTech has come to the forefront of many aspects of financial services. From banking apps to contactless payments, it’s clear that the Covid-19 pandemic has accelerated the adoption of digital tools. UK FinTech week is an opportunity to reflect on the role FinTech plays in everyday life, as well as the possibilities it presents for financial inclusion.
At the Commission, we recognise that FinTech can help in solving many of the challenges that lead to people being excluded from financial products and services. Too often, traditional products and services have little flexibility and are not serving the needs of consumers. More tailored products can lead to a greater number of people being able to manage their money in a way that works for them.
We were pleased to see financial inclusion given prominence in the recommendations of the Kalifa Review of FinTech earlier this year. In particular, the incorporation of financial inclusion in future regulatory design and strategic thinking will be vital to ensuring that no vulnerable consumers are forgotten as the financial services landscape changes. While barriers remain which fall beyond the scope of the review, it is encouraging that the sector will not move forward without consideration of its power to include more people financially.
However, while the exciting developments in FinTech often present opportunities, there are still challenges to overcome. Digital and financial exclusion often overlap, creating a danger that people will be left behind financially if they face difficulties getting online. The pandemic has thrown into sharp focus the inequalities many households face when it comes to accessing the internet. Despite common narratives that young people are digital natives, CapGemini found that 43 per cent of the offline population globally are below the age of 35. The high cost of devices and internet access can prove a barrier to many on low incomes, while complexity and lack of skills can hold others back from transitioning online. Equally, we must not forget the number of small businesses owners who are not ‘digital by default’. Many small businesses, and particularly micro businesses, still need support to adopt new methods of payment and understand the online tools available to help them run their businesses so that they are able to thrive.
Investment in digital skills and infrastructure must therefore be a high priority as the UK FinTech sector continues to boom. As we move, increasingly, towards digital solutions, there is a need to upskill the population to make sure that no one is left behind. Greater education in tech and digital will also pave the way for sustainable job growth in emerging sectors. FinTech leaders can contribute not only to the UK’s global pre-eminence in the sector, but also to employment as the country emerges from the economic impacts of the pandemic.
The next year will be a crucial one for the UK’s recovery. We hope that FinTech can remain a key part of that recovery and move us closer to a country where everyone is financially included.
UK FinTech Week runs from 19 – 23 April and is run by Innovate Finance. You can find more details about their events at innovatefinance.com/ukfintechweek/.