Overlooked and under-served: a changing financial landscape
By Miranda Young, Commercial ManagerJun 22nd 2022
Through listening to our customers and analysis of our rich data sets, we were aware that the consumer credit landscape had changed significantly in recent years. This has been driven by social and economic changes across the UK, Europe and the world, and of course the pandemic, which continues to have far-reaching effects.
While for many, the proportion of increased savings and reduced debt balances during the pandemic, we believed that these statistics masked a far less positive picture for a large segment of the population. To better understand this, we commissioned PwC to size the financially under-served population in the UK, and to investigate the key drivers. This resulted in our report, 'Overlooked and financially under-served', which we released last month.
The findings confirmed what we believed to be true — that the under-served population had grown considerably since last calculated in 2016, seeing an increase of 50%, from 13.6 million adults to 20.2m.
The report also highlighted that the financial impact of the pandemic for the under-served was even more severe than previously estimated. We found 11m adults had their personal income impacted, and did not expect it to recover in the next two years.
The research also found that as of December 2020, 9m people had to borrow more money than usual. It can be assumed that this trend will have continued to increase since then. The groups most likely to have taken more debt are renters, people from minority ethnic groups, parents and carers, disabled people, those who are shielding and young people.
Collaboration is key
At TotallyMoney, we’re on a mission to help everyone move their finances forward. This includes those who are often overlooked by mainstream lenders and under-served by the financial services industry, and is a group that we are strongly focused on helping.
However, we can’t do this alone and are calling for industry collaboration to support and serve this growing population.
TotallyMoney is currently progressing with its open banking initiative. This will help paint a more complete picture of thinfile customers’ finances, meaning lenders can better understand and serve them. In recent years we’ve seen a 29% increase in the number of people with no credit history. It’s this population which could significantly benefit from open banking, as it unlocks the kind of data that credit reports just aren’t providing.
Additionally, via API integrations with TotallyMoney, our lending partners can optimise their quotation service and application journey. This results in better, more accurate offers for customers, showing eligibility scores, guaranteed rates and guaranteed limits.
With 1 in 3 adults now defined as under-served, we must focus on delivering products which meet the needs of these customers, providing them with a wider range of innovative options.
There are many opportunities for lenders and financial institutions to step up and better support this growing population of customers. They need to be supported in navigating this challenging landscape by providing innovative, differentiated and inclusive credit products.
We welcome conversations with partners to explore our role, helping lenders to identify opportunities for growth, so everyone can move their finances forward.