By Jamie Miles, business development manager at Onfido
Financial exclusion is still a problem in the UK — statistics show that nearly 2 million adults in the UK still did not have a current bank account in 2015. Individuals and families with no access to financial services struggle to save up and keep track of their spending, and are unable to make online purchases as they lack a payment card, which in many cases would save them time and money. Moreover, those who are financially excluded spend an extra £1,500 every year on payday lending services, as they can’t make use of overdrafts or apply for a low-interest loan.
Included in the body of financially excluded individuals are those professional workers who are new to the country. A solution is needed for our doctors, architects and software engineers, who are some of the excluded members unable to open a bank account because they need to have their identity verified. The reliance on credit records to perform this verification is the crux of the problem. This method of verification is ineffective because those new to the UK do not have a credit record in the country. It’s a vicious cycle: you can’t have an account because you never had one, and you never had one because you never got one.
FinTech companies such as Mondo are combatting the problem of financial exclusion head-on. With the support of RegTech companies such as Onfido, they are able to use alternative methods for identification that are designed for those without credit records. Thus, those previously denied financial services are now being granted access to conveniences typically taken for granted, such as online banking or e-commerce. As these collaboration continue to emerge, the possibility of inviting everyone to our global financial system looks more realistic, which will be a world that benefits both businesses and customers.