The cost of living crisis and high inflationary environment is taking a toll not just on people’s finances but on their mental health. A recent UK study of 2,000 British people from lender Creditspring showed that 30% reported deteriorating mental health since the start of the economic crisis. Those aged 25-to-34 report experiencing this worst, with rates rising to 48% among this group.

Couple this with the rise of unsafe and unethical options offering people financial help, and the topic of financial inclusion has never felt more pressing.

The backdrop for this year’s Financial Inclusion Week may seem somewhat bleak, yet we have witnessed time and time again that throughout times of hardship, opportunity is never too far behind.

Over the course of this week, the conversation will focus on how the UK population can better manage their money, improve their understanding of finances and shed a spotlight on fintechs that continue to be hard at work building products that are proven to create a positive difference in a person’s financial life.

For us personally at Seven Consultancy, we’ve had the privilege of working closely with a number of clients in this space. Most recently, we launched BuildMyCreditScore to media (which helps people improve their credit score by issuing users with a debit card that is connected to their existing current account), and Creditspring (which provides flexible, no interest loans via a model called subscription finance). Both are using innovative new technologies and approaches, including open banking, to improve the financial lives of millions of people in the UK.

Before we get into these solutions in detail, a quick snapshot of why the UK needs to continue talking openly about financial inclusion:

• The Bank of England (BoE) reported in its quarterly credit survey that the availability of secured and unsecured credit to households decreased in the three months to end-August 2023.
• The BoE also stated that lenders reported overall demand for unsecured lending slightly increased in Q3 and is expected to increase in Q4. Within the overall figure, demand for credit card lending slightly increased in Q3, and is expected to increase further in Q4.
• According to IPSOS, for pressure group Fair4AllFinance, more and more struggling households are turning to illegal lenders in the absence of regulated firms operating in the market to service those who are financially vulnerable. Between May 2021 and May 2023, 2.8m low income households had lending applications declined by regulated firms creating a ‘perfect storm’ in the credit market and causing around three million people turning to illegal lenders over the past three years.
• This is impacting swathes of people across the UK but certain groups of people, and who may have very specific banking needs, are feeling it more than others. One example: according to Creditspring, one in eight disabled people said that they had contacted debt advice charities about money worries in the previous 12 months, with 59% of disabled people saying that living costs making them feel financially unstable.

These points highlight how critical it is for people to have help to manage their finances, and in turn, their credit score which is people’s route to affordable, responsible credit. It also showcases that there is demand for credit, which is not being met, leading to some unsavoury avenues for obtaining credit. Lastly, it shows that without specific thought, concern and care for certain communities, certain groups of people will be left struggling to make ends meet.

BuildMyCreditScore

According to most sources, the average credit score in the UK is 644 on the Equifax scale. A good credit score needs to be at least 531. Although this sounds promising, there is still a large proportion of the UK population who is nowhere near this score. According to TotallyMoney, this can increase the cost of debt and outgoings by an average of £58 a month – £693 a year – compared to those with a good credit score.

BuildMyCreditScore issues users with a debit card that is connected to their existing current account via open banking. The fintech presents these purchases to the three big credit reference agencies as if they were direct debit payments.

In a pilot phase earlier this year, customers raised their score by up to 55 points within three months, with customers noting they became eligible for better financial products that they had not been offered before.

You can see BuildMyCreditScore’s recent mentions in This is Money, here.

Creditspring

As mentioned above, while credit is a lifeline for many, obtaining it is not always easy for people. Moreso, it can be hard for people – particularly those who are less financially literate – to understand confusing APRs and balance transfer deals from lenders which can lead to unexpected charges down the line.

Creditspring is bucking the trend when it comes to lending – offering flexible, no interest loans via a monthly subscription (members can borrow twice a year interest free). It intends on lifting individuals out of a debt spiral, whilst speaking to them in layman’s terms so there is no confusion or ambiguity (or hidden fees) when applying.

You can see Creditspring’s recent mentions in publications such as the Evening Standard and the BBC.

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Financial inclusion is not just a hot-topic now, it’s a year-round necessity for those who need financial support.

The financial services sector will play a crucial role here. The fintech industry experienced firsthand the difficulty of educating the wider population around open nanking and its benefits, whilst also learning the art of simplifying messaging around financial products for the betterment of the country. This is no time to stop; the industry needs to keep pushing financial education and encouraging an ongoing conversation so we bring everyone up together.

Not only will this help individuals on a personal level, this will help the wider economy as we build back over the coming years.

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About Seven Consultancy

It’s our mission to create purposeful customer-led communications that drive genuine impact for the partners we work with – whether that be shifting mindsets, raising awareness or scaling the business.

We work in partnership with our clients to reach their intended audiences through media and influencer engagement using insight, clear storytelling and creative, differentiated activity.

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