The AltFi view on financial inclusion: digital exclusion is hitting women hardest
Fintech start-ups have helped improve access to financial services across the board but the numbers show that financial inclusion is a long road to travel.
The UK is experiencing its worst economic contraction since the Great Frost of 1709 when temperatures of -12c in London kept people across Europe indoors for months in what was the coldest winter for 500 years.
Alongside some chilly weather, last week also brought a slew of biting data from the Financial Conduct Authority (FCA) on people’s financial lives. Some of the most alarming passages in the 222-page Financial Lives survey show stark inequalities between men and women when it comes to finances in the UK.
The FCA’s data from February 2020 show women are marginally more likely to be digitally excluded (meaning they have low/rare access to the internet) than men, but this gender difference increases profoundly with age. For those aged 75+, 28 per cent of men are digitally excluded, compared with 44 per cent of women. Overall 9 per cent of UK adults (4.7m) are digitally excluded, an improvement on 14 per cent in 2017.
Also, just 12 per cent of women saving in a defined contribution pension are highly engaged with their pension, versus 26 per cent of men. The survey found women are less likely to read their pension statement, review their pension savings, increase contributions or know about the various charges.
At the same time women, especially in the 25-54 age group, were nearly twice as likely to use high-cost credit than men—with the FCA pointing to catalogue credit or store credit as a key driver.
All in all, it is hardly surprising that the FCA’s figures underline a broad finding: Financial resilience ( over-indebted or having little capacity to withstand financial shocks) is not evenly felt.
Between 2017 and the start of the pandemic in 2020, it improved more so for men than women (18 per cent of men had low resilience in 2020, down from 21 per cent in 2017, compared with 24 per cent and 23 per cent for women, respectively). The improvement spans all ages groups from 18 to 69.
A brighter future
Dozens of fintech start-ups have made improving access to financial services a priority with much notable success in recent years.
Pensionbee, a digital pensions provider led by a female CEO Romi Savova, says that since 2017, the proportion of invested female customers has been rising steadily, and women now make up around 33 per cent of the invested customer base, compared to 26 per cent in 2017.
Savings and investment app Moneybox has also seen a small uptick in the number of investing female customers, with most new female customers choosing to open a Stocks and Shares ISA.
Over a third (36 per cent) of its account holders are women and just over a quarter (26 per cent) are actively investing on the platform. For Lifetime ISAs the gender split is pretty even with 49 per cent female and 51 per cent male
In the past three hundred years or so, the financial lot of women has improved enormously but clearly, as the figures show, more needs to be done to improve access, particularly for older generations. It is a challenge fintech should accept and clearly Covid-19 has made the need ever more greater.