Inclusive growth without financial inclusion is impossible
If the "economy is to work for everyone" we all must have access to it
This article was produced in association with Mastercard
For too long financial inclusion has been considered to be an issue restricted to the developing world. In fact, 100 million people are thought to be unbanked or underbanked across Western Europe. When individuals and small businesses cannot participate in the financial system and transact exclusively in cash, a significant amount of wealth is stored outside of the financial system and credit is scarce and expensive. Individuals and economic growth suffer.
As a socially responsible business, Mastercard recognises the role it can play in driving inclusive growth by addressing this challenge. Across the globe we are sharing our digital payments expertise with Governments and others with the aim of reaching 500 million excluded people by 2020 and here in the UK we have been proud to sponsor the independent Financial Inclusion Commission since its creation in 2014.
Business has a role to play, but Governments must provide leadership. We were therefore delighted to see the appointment in June of Guy Opperman MP as the new Minister for Financial Inclusion as well as the establishment of the Inclusive Economy Partnership Delivery Group which is focusing on financial inclusion as one of its three big challenges.
By taking a lead on tackling exclusion and unlocking growth in this way policy is likely to have a positive effect on people’s lives and Government revenues.
However, if the “economy is to work for everyone” we all must have access to it—being financially included is key to this. Right now, 1.5 million people in the UK remain unbanked. This locks them out of the digital economy and unable to contribute to it. It leaves those who can often afford it the least to pay more for goods and services (about £1,300 a year), and to have less choice and control over their finances.
The UK has a flourishing digital economy which relies on electronic payments to enable businesses, governments and individuals to connect. However, as an increasing number of services and consumers go digital the social and economic cost of financial exclusion is likely to increase exponentially if Government does not address this issue quickly. Universal Credit, the new combined single welfare payment, provides a unique opportunity do just that, financially and digitally enabling excluded families and individuals.
Inclusive growth without financial inclusion is impossible and now is the time to act.
The Financial Inclusion Commission is supported by Mastercard, but remains wholly independent. Promoting financial inclusion is a global corporate objective for Mastercard and supporting the work of the Financial Inclusion Commission is a key part of our efforts to promote financial inclusion in the UK. Mastercard believes that all people should have an opportunity to participate in the economy. Our payment innovations, such as prepaid and mobile solutions, as well as our philanthropic and consumer education programs, bring the benefit of finance to the unbanked and underbanked, helping them build a stronger future for themselves, their families and their communities.
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