Finovate Europe 2022: how the industry should work together to drive financial inclusion

Driving wider-reaching financial inclusion across the world is a key discussion point in financial services.

Financial inclusion was a key talking point on the first day of Finovate Europe 2022

This year’s Finovate Europe conference featured a panel discussion covering how the industry should work together to meet the needs of all marginalised groups of people.

Chaired by fintech analyst Anette Broloes, the panel featured Natalie Ledward, head of vulnerable customers at Monzo; Sanghamitra Karra, Morgan Stanley’s EMEA head multicultural client strategy and multicultural innovation lab; and Birce Ciravoglu, CEO office director at Papara.

Noting the all-women panel, Broloes began by outlining the ways in which women in particular interact with financial services. “Women like to connect their financial services with what they do, how they live in everyday life and to their dreams and aspirations. And they like communities and learning together.”

On that note and to kick off the discussion, the panel touched on the importance of community in broadening financial inclusion.

Ledward said that it’s important in banking to create safe spaces “where people can share their experiences, share their knowledge, share their situation”.

She related how in 2018 Monzo was researching how to handle gambling transactions. The challenger created a community of Monzo customers who were “experts by experience”. As a result of the voices in that community, Monzo developed the 48-hour cooldown mechanism, which is “very effective”, Ledward said.

Morgan Stanley’s Karra emphasised the need to consider one’s own personal trajectory. Putting yourself in the position of both the client and the customer, she says to ask yourself, “where are you spending that dollar?”.

“Where is that investment that you’re making in your pension fund actually going to? Are you making sure that the dollar you spend is going back to communities?”

With the range of financial institutions represented on the panel, the question of what smaller fintechs could teach larger incumbents when it comes to driving financial inclusion was next on the agenda.

Papara’s Ciravoglu said established companies can learn to be more agile from challengers. “New features take us a couple of weeks, whereas it would take the incumbents months or years.”

Ciravoglu cited the work Papara has done with getting more visually impaired users banked. In just one and a half months, Papara launched a new app for more than 5 million visually impaired people. “We don’t have the front table bureaucracy that the traditional banks have so we can move things a lot faster. And that’s what they can learn from us.”

Karra contrasted this agility with the stability of a larger institution. “Banks like Morgan Stanley have a history of surviving for a very long time,” Karra said, suggesting that both agility and stability combined can create success.

“You learn to know when to be a child when to create processes, when to strengthen foundations and when to experiment.”

Transparency is also a key learning that can be transmitted from fintechs to legacy financial institutions, Ledward added. “We’re all on this same journey towards inclusion. But we’re all at different stages on that journey. Being honest and open about what you’re doing really well and what you’re not doing so well is key.”

Thoughts turned to regulation, and what role it plays in the quest for more diversity and financial inclusion. Ciravoglu said that regulation is “crucial” when it comes to financial inclusion. She related how in Turkey traditional banks pre-pandemic required in-branch attendance to open a new bank account, but e-money institutions did not.

“The regulator and incumbents saw that this was a better way of doing things and over the course of a year, the regulator prepared a new law for the traditional banks, which allows them to onboard users online without anyone going to a branch,” Ciravoglu said.

Ledward agreed on the importance of regulation and underscored how important it is in efforts to broaden financial inclusion.

She noted that recent Financial Conduct Authority (FCA) guidance in the UK regarding vulnerable customers “has really helped us embed that culture of considering inclusion as part of our culture at Monzo. I think that that is key for firms at different stages of the journey to be able to really use it as a tool to push this agenda”.

Ciravoglu added: “I think with the help of regulation, transparency and technology, we can reach out to all the underbanked and underserved people”.

Ciravoglu said she would like incumbent banks to make more effort to engage a diverse set of people, whether that is changing their onboarding processes, products and fees or marketing. But regulators should also prepare for the medium-term and ensure there are sufficient laws to enable this transition.

Final thoughts from the panel reiterated some of the key points from the discussion. Ledward emphasised transparency, suggesting this is the “starting point” for financial inclusion efforts.

Karra highlighted empathy and putting yourself in the shoes of others, “thinking about your role in everyday life and what you’re doing with your money as an employee, leader or customer”.

Ciravoglu rounded out the discussion by pointing to the role of regulation, concluding that it must play an active role and support investment in technology and diverse sets of people in the sector.