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• make financial education (point six of Vision 2020) context-specific, rather than
relying on people remembering lessons learned years ago.
This is not to understate the challenges in terms of business models, technology,
regulation and consumer behaviour. Even if “next-generation” bank accounts do
offer those on the financial margins a potentially transformative experience, they
will do nothing for the digitally excluded. In that sense, FinTech may actually
exacerbate inequalities for those without access to a bank account. Still, this is not a
development that those with an interest in greater financial inclusion can ignore. The
digital challenger banks are confident that customers will soon expect their banks to
help them with their finances – just as Google already helps people catch their flights
on time or find a restaurant. We have to find a way to ensure that the financially
excluded do not miss out on this revolution.
“Back to Earth”: FinTech and financial
inclusion today
In practice...
There are several more immediate developments in credit scoring, savings and
insurance that may benefit the financially excluded. Again, however, these
developments only work to the benefit of those who are not digitally excluded:
• Credit Scoring: As individuals spend more time online, they leave behind datarich
digital “footprints”. The CEO of Kreditech, an online lender, has described
“all data as credit data”. If that is true, those digital footprints may contain data
that could help lenders price risk for “thin-file” borrowers. As a result, some
of those who are currently financially excluded – those with minimal credit
records but who are active, for example, on social media – could gain access to
a wider range of credit products. London-based Aire is typically held up as the
poster-child for pro-inclusion, alternative credit scoring. Founded in 2014, the
company’s scoring process relies on “expressed permission”, whereby credit
applicants decide which datasets Aire can utilise in calculating their credit score.
Another shift – towards greater transparency in credit scoring – could also benefit
the financially marginalised. As Aneesh Varma, Aire’s co-founder, has put it:
“Helping people understand the factors and features that impact their credit score
allows them to also positively change their financial habits in the long run… The
black box approach of the past has created confusion and uncertainty where people
end up guessing whether their actions are actually improving their scores.”
• Savings: At least two “smart” savings apps that may have relevance for the
financially excluded are preparing to launch. They have three main features: easy
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