Shifting Mindsets for Financial Inclusion
The Financial Conduct Authority’s (FCA) recent speech, “Catalysing Productivity and Growth: Changing the Mindset on Financial Inclusion,” presents an essential framework that resonates with ongoing efforts to drive inclusivity in the financial services sector. While many will focus on the direct call to action—improving access to financial products for underrepresented communities—the speech holds deeper layers that could revolutionise how we think about the intersection between financial inclusion, productivity, and sustainable economic growth.
At RegTechPRO, we believe this speech not only advocates for financial inclusivity but also subtly nudges towards a paradigm shift in how financial services firms approach their responsibility to catalyse long-term economic growth.
A New Lens on Financial Inclusion: The Economic Imperative
Most discussions around financial inclusion focus on social justice, and rightly so. However, an often-overlooked angle is the economic imperative that financial inclusion offers to businesses and the wider economy. The speech hints at this by linking productivity to inclusion, suggesting that failing to include marginalised communities in financial ecosystems hinders national growth. Firms that take financial inclusion seriously aren’t just acting ethically; they are making smart, long-term business decisions.
Key Takeaways for Firms:
Unlocking Untapped Markets: By broadening their customer base to include underserved populations, firms are opening themselves to new revenue streams. These populations can contribute significantly to economic activity once given access to the right financial products.
Boosting National Productivity: More inclusive financial markets lead to more economic actors engaging in entrepreneurship, home ownership, and savings, directly fuelling national productivity.
Long-Term Economic Stability: Offering fair, inclusive financial products promotes trust and resilience, reducing the risk of financial exclusion contributing to economic shocks.
How RegTechPRO Supports Financial Inclusion:
Automated Compliance for Complex Needs: Many firms hesitate to expand their services to underserved markets due to the complexity of regulatory compliance.
Enhanced Data Analytics: Our platform provides powerful insights into customer behaviour and needs. By better understanding underserved groups, firms can design more tailored, fair, and inclusive financial products.
Consumer Duty Alignment: Financial inclusion aligns directly with the FCA’s Consumer Duty, which requires firms to act to deliver good customer outcomes. RegTechPRO helps firms meet this duty by ensuring that product offerings and customer communications meet regulatory standards while fostering inclusion.
Changing the Mindset: Inclusion as a Driver of Innovation
The call for a mindset change is one of the speech's subtler but profound implications. Financial inclusion is often seen as a ‘tick box’ exercise or, worse, a charitable endeavour. The FCA’s speech reveals the potential for innovation and creativity in financial product design. Financial inclusion isn’t just about fairness; it’s a fertile ground for product innovation.
Key Points for Financial Firms:
Innovation through Inclusion: By focusing on the needs of underrepresented groups, firms can develop products that are not only inclusive but innovative. For instance, micro-savings or pay-as-you-go insurance models can benefit the underserved and mainstream customers.
Agility in Product Development: Adopting a mindset of inclusion pushes firms to be more agile in product development. Rather than designing products for the ‘average’ customer, companies should adopt flexible models that adapt to varying customer needs.
Author: Laurence Rixon
Date: 20 September 2024
