Lending Standards Board: Digital banking vs inclusion

FinTech Magazine speaks to Head of Insight at the Lending Standards Board, Anna Roughley, about the detriment to financial inclusion caused by a growing revolution in the digital banking space. 

How has the digital banking revolution impacted financial inclusion?

The banking and lending industry currently stands at a crossroads. For a large cohort of customers, accessing banking services from their smartphone or laptop is more than ideal – it’s desirable. 

On the other hand, there remains a valuable tranche of customers who, by preference or necessity, want to use a bank branch, or pick up the phone to ask a question, valuing the human touch of speaking to someone.

While the rise of digital banking has undeniably brought a myriad of benefits to many customers – with instant access to accounts, interactive financial tools, and swift transactions – technology can also be a barrier that perpetuates exclusion. 

For customers not confident using technology, or for customers who can’t use technology because it is inaccessible to them, the rapid closure of bank branches in favour of digital tools leaves them struggling to access the financial services they need. 

As the mass acceleration of digital products and services continues to advance, the banking and lending industry must adapt to keep pace with the change, ensuring that products and services are designed for all and good customer outcomes do not waiver as a result.

Why is lived experience so important for improving financial inclusion?

The importance of lived experience across banking and lending services cannot be overstated, from the design of a product or service, all the way through to delivery and feedback. 

This can be done with external support, such as charities or other third-party organisations, or through shared lived experience of a firms’ employee base.

By using the skills and experiences of existing staff, and creating a culture where staff feel able to disclose and share their lived experience if they want to, you can help to raise awareness amongst your organisation of different challenges customers may face and how to support them. 

Hearing the experiences of people of different ages, backgrounds, religions, ethnicities, abilities, and disabilities, including those who are and aren’t tech savvy, can help to ensure that a product or service caters for the masses, not just a few.

How can the banking and lending industry address the digital divide with technology?

The narrative of inclusion must not overlook those who are left estranged by the digital revolution. 

Instead, the banking and lending industry should take a two-pronged approach that acknowledges the diversity of customers’ needs and aspirations. 

Rather than letting technology become a barrier that perpetuates exclusion, the industry can harness technology as a tool to bridge gaps, whilst recognising that for some it won’t ever be a suitable solution to accessing financial services.

For the new generations growing up with technology as the norm and the many others turning to it for their everyday needs, the challenge lies in designing digital platforms that offer personalised experiences. 

Tailored financial advice, interactive tools, and easy-to-navigate interfaces can help foster a sense of empowerment while ensuring that customers don't feel left to navigate the financial realm alone.

An inclusive design process also helps to ensure that any digital platforms promote accessibility and offer open products and services that work for all customers. 

This means ensuring a diverse selection of viewpoints are being used during the design phase so firms have a better understanding of the risks. 

For example, disabled people have been found to have lower smartphone ownership than the non-disabled, so the increased push for customers to interact through mobile banking apps raises concerns that it could leave some disabled customers without access to banking or lending services.

How can physical bank branches be transformed to improve the accessibility of financial services?

Although many customers are moving to digital-only banking, there is still a place for face-to-face interaction through branch access. 

In some areas hit by bank branch closures, banking hubs, an innovative way of maintaining access to cash and face-to-face point of contact in local communities, have been introduced. 

These hubs provide a shared service with numerous banks coming together to allow customers to carry out their financial needs, face-to-face with someone from the post office or their bank. 

It’s an accessible way of filling the gaps left by branch closures and ensuring that human touch for those who need it.

Banking hubs and branches also need to adapt to ensure they are inclusive. Ensuring branches and new hubs are accessible goes beyond having a ramp or power-assisted door. 

In a recent piece of research, we spoke to representatives from the Deaf community and learned that British Sign Language (BSL) does not actually translate to plain English when written, and therefore a letter received in plain English, or a poster on a wall in a branch, may not actually be accessible for certain individuals. 

This is why including the voices of those with lived experience in the design and delivery of your services is so vital.

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