How fintech can help tackle financial exclusion in Scotland

Fintech and financial inclusion event | supplied

King was speaking as part of a recent panel session ‘Harnessing Fintech Innovation to Increase Financial Inclusion: A Discussion’ at the Edinburgh Futures Institute.

In his introduction, the Lord Mayor - who pointed out he is a Scot from Aberdeenshire - described his position as a “nationwide role” and “not just for London”. King said too many Scots don’t have a bank account, a major barrier to financial inclusion. He added that technology can help people be more engaged in finance.

Sitting alongside King on the expert panel were Tynah Matembe, chief executive officer of Money Matix, Kirsty McKenna, an innovation programme manager at FinTech Scotland and David Tracy, head of data products at Smart Data Foundry.

Money Matix focuses on financial education, including work with children to build an understanding of money management. Matembe told the audience of her personal experiences of financial exclusion when she arrived in the UK from Uganda almost 18 years ago.

She said: “I was born into wealth in Uganda. I had money. I had a private school education. I was at the top of my game. I was a highly skilled migrant to the UK.”

However, she faced questions around such things as the fact she had no credit file because “cash was king” where she came from.

Matembe explained: “I became vulnerable and faced inherent bias. Such bias is real and can happen to anyone.”

Having no credit history, she said that she could not open a bank account in the UK and decided she had to do something to help solve this problem. She set up Money Matix to promote financial inclusion for everyone from young people to other migrants.

Speaking at the event, McKenna of FinTech Scotland, a cluster management organisation for the sector, said: “Access to financial services is, in my opinion, a basic human right.”

She explained that FinTech Scotland collaborates with others, including the third sector, governments, the Financial Conduct Authority (FCA) and trade bodies, to support financial inclusion in innovative ways. This includes the development of a financial inclusion dashboard to bring all the relevant data together. She said: “This will give us an in-depth view of what financial inclusion can look like and help influence and measure policy changes.”

She also referred to the FCA’s TechSprint aimed at using technological solutions to foster financial inclusion and a more equitable landscape.

Tracy of Smart Data Foundry - a subsidiary of the University of Edinburgh that unlocks the power of financial data to drive positive social change - explained that it aims to tackle poverty and inequality and improve financial wellbeing.

It works in partnership with others, such as the Joseph Rowntree Foundation, to better understand income volatility and the “poverty premium” which sees poorer people paying more for goods and services.

And collaborating with NatWest Group over the the four years using data from 5 million fully anonymised bank accounts it has developed a dashboard with data on such things as income and spending that can be broken down nationally, regionally and by local authority, including Renfrewshire Council.

Tracy said: “This will help make council services more relevant and timely.”

Speaking to Rui Cardoso, head of public sector engagement at Smart Data Foundry, on the day of the panel session, he explained to me how its Economic Wellbeing Explorer dashboard will encourage financial inclusion.

Cardoso said: “For example, from the data we can see how many people will have £100 or less in their bank account after essential and committed expenditure. We can get early indicators of where to focus resources. We’re ready to scale this from Renfrewshire to other local authorities.”

Sarah-Jayne Dunn, policy manager (financial health) at Citizens Advice Scotland (CAS), spoke to me after the event. She said: “We’ve been doing a lot of work over the last year around financial inclusion, focusing primarily on access to banking. For example, we have clients who if they go through bankruptcy or have financial difficulties can find their bank accounts are frozen or closed. Not having access to a bank account is the ultimate form of financial exclusion. Without a bank account you can’t get your income, a private rental agreement or cheaper forms of insurance.

“We’ve been looking at how fintech can support our clients to be more financially and digitally included.”

She added that CAS will soon be publishing research into the issue of people being able to get access to a bank account and the barriers that are in place.