Technology has proven to be key in bringing financial services to a pool of new users. There still is, however, a gap in the accessibility of critical financial services to many people. Even with the seemingly unlimited access that mobile phones provide, there are still approximately 1.7 billion unbanked adults globally, with 40 million of those being in Europe. Are banks really doing enough to provide access to Finance? In this article we explore how advanced they are in terms of providing financial services globally.
Our partner and the composable banking platform Mambu, recently published a report on the state of financial inclusion. Considering the explosive growth of digitalization in banking, now is a great time to look at the state of financial accessibility across several markets.
Those who find themselves traditionally banked or unbanked, feel underserved and are struggling to gain access to the financial services that should be readily available to them. According to a report by the world bank, 66% of unbanked people cited not having enough funds to open and maintain an account as the most common reason for being unbanked.
66% of unbanked people cited not having enough funds to open and maintain an account as the most common reason for being unbanked.
When you look at the banked versus the unbanked: it may sound like a clear-cut distinction, but a financial accessibility gap exists in both categories. In fact, although 50% of consumers are using two or more financial apps right now, that doesn’t automatically classify them as being a banked individual.
Where ‘unbanked’ customers usually have some form of identification, they often lack the proper documentation required by traditional financial services providers to sign up.
Extending services to large audiences is one of the driving goals of any financial institution. Therefore we expect that providing financial inclusivity is a trend that will continue to be big in upcoming years.
But back to the main question, are banks doing enough to boost accessibility to their services? Mambu reported a resounding no, with 56% of banked customers believing that financial institutions should be responsible for educating consumers about their finances. 65% of those who are unbanked state they were unhappy or indifferent with their financial situation.
Even in the banked community, one in four consumers are not happy with their current level of understanding about their finances and the options available to them. Thus, there clearly is a disconnection between the consumers and banks.
It’s clear that the pandemic has accelerated the demand for more personalised and digitised services. Interestingly, both banked and unbanked people share a number of similar criticisms towards the state of financial inclusivity.
The very fact that challenger banks and financial service providers have been able to cause such a wave of change is a hard lesson for incumbents.
Our experts believe that there is an opportunity to improve banking capabilities in both the financially mature, as well as the underserved segments. In western markets, embedded finance, open solutions and segmented approaches would improve customer satisfaction.
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