Coronavirus: From Lockdown To Bailout Oh, And The Issue Of Financial Exclusion

There are lots of ways in which FinTech is changing the world, and the one we love to discuss the most is financial inclusion. The figures stun me. Over a billion people have been banked in the last decade, according to the World Bank.

69 percent of adults – 3.8 billion people – now have an account at a bank or mobile money provider, a crucial step in escaping poverty.This is up from 62 percent in 2014 and just 51 percent in 2011.


But what about financial exclusion? Why does that exist and what can be done about it?

Financial exclusion exists for a variety of reasons: too low or unreliable income, no fixed address, no credit history, failed financially in the past, being a woman, being a refugee, being foreign, being a Muslim.


I guess I’m on a crusade here, after my week of diversity discussions, but it does amaze me how many stories I hear about discrimination in financial services against migrants and people who are not the main income earner. The system is biased against them.

Nearly one of every three women in the world — or 1.1 billion — are excluded from the formal financial system.

Financial exclusion in Europe is estimated to be between 10% and 12% and, if focusing on the bottom of the income distribution, between 14% and 22%.

According to Sabe Economics, the rate of financial exclusion for Muslims in Italy is nearly 30%, a lot higher than for migrants (18%).

The trouble with financial exclusion is that it is punishing. If you cannot use the banking system, how do you get a loan? How do you pay? How do you get access to cash?

Adam is currently receiving welfare benefits and is struggling to make ends meet. When he was refused a bank loan – due to his low credit score – he applied for a ‘payday’ loan. “The interest rate was about 1,000% APR or something like that. I kept going back and getting more and more from different companies. I got one to pay off another one. I got eight or nine out in the end… I won’t make that mistake again”. He has now paid them off and hopes to be able to save in the future.

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