Banks may not be interested in people experiencing poverty – but we are

Do the big banks and mainstream lenders really care about consumers on the margins of society? Given that banking and access to affordable finance are often heralded as essential services to getting by in the modern world, the vast numbers of people unable to access mainstream financial products is problematic. 

Financial exclusion affects a wide range of people, including those on minimum wage with little disposable income, and can have knock-on effects for accessing accommodation and employment. It can also contribute to food poverty.

• Loss of physical bank branches leaving pensioners at ‘greater risk of scams’
• How do we keep hope alive in 2025 when so many people are going hungry?

While high-cost providers such as Wonga and, more recently Amigo Loans, did serve the ‘sub-prime’ market, tighter regulation on the back of concerns about unaffordable lending has drastically squeezed the sector, leaving millions in the financial hinterlands.

Some have resorted to borrowing from friends and family or, often unwittingly, illegal money lenders (aka loan sharks) that lead to a downward spiral of unaffordable debt and, in some cases, more sinister repercussions. Is there another way?

Dave Fishwick of Burnley Savings and Loans (BSAL) has lobbied parliament for major banking reforms. In 2022, BSAL reported it had given loans totalling more than £27m to thousands of businesses and consumers.

Iceland microloans – ‘helping fight food poverty through flexible, ethical credit’ – also offers a clear demonstration of how a different, mission-led approach can reach and support financially underserved populations: people some would argue have been cast aside by traditional high-street lenders who lack the appetite to serve this market. This particular high street retailer partners with community lender Fair For You, showing how well-thought-out partnership working can offer hope.

Traditional approaches to creditworthiness assessment, relying on the interrogation of shared credit performance data, can also present an unfortunate barrier, particularly for consumers who lack a sufficient financial track record as a result of their circumstances, be that recent arrival from overseas, a history of financial exclusion, a preference for whatever reason to exist in the cash economy, or several other scenarios.

Experian, a leading credit data firm and my current employer, has been trying to address this in recent years by championing, for example, the sharing of rent payment information and also through the use of banking transaction data, through Experian Boost. Both initiatives are designed to help people better evidence their financial reliability and access affordable credit. But for these schemes to positively and tangibly impact systemic financial exclusion, more banks and other mainstream lenders need to rethink their onboarding systems.

You may have seen the HSBC TV ads showcasing their partnership with homelessness charity Shelter to provide current accounts to people with no fixed abode, and this is encouraging. But there is so much more work to be done to make financial exclusion a thing of the past. And if financial exclusion is to be cast into the realms of history, we need to see more innovation and partnership working and a fresh approach to making affordable finance available to all. Let’s hope we can bank on it.

James Jones is head of consumer affairs at Experian.

Do you have a story to tell or opinions to share about this? Get in touch and tell us more. Big Issue exists to give homeless and marginalised people the opportunity to earn an income. To support our work buy a copy of the magazine or get the app from the App Store or Google Play.