Nils Elmark: Saving 10 Million Casualties of Modern British Banking


Two million adults in the UK do not have a bank account, writes business and finance consult Nils Elmark. More than 10 million people have such low digital or financial capacity that it excludes them from activities that most of us take for granted.

They don’t have access to the Internet, they don’t shop online and they are unable to manage their own money properly either because they are not given the tools they need or because they don’t know how to operate the financial system. Each year, at least two million families have to take out expensive payday loans to survive one day at a time, and are charged high fees when they pay their bills in cash. Their savings – if they have any – are so low they won’t tide them through the month if their income drops by a quarter.

They are the elderly, the migrants, the unemployed, those with low or unstable incomes, or those who have experienced a significant life shock. They are the casualties of modern banking. They are the two out of the ten who have limited access to the financial system and therefore have to manage on their own. But the biggest problem is not their rejection from financial system itself – the biggest problem is that if we do not include the underbanked in the modern financial system we will exclude 10 million people from the rest of society.

The banks are aware of this. The figures at the start of this column are from a new comprehensive study on financial inclusion commissioned by Lloyds Bank which, together with five other leading banks, has struck an agreement with the treasury to offer fee-free basic bank accounts to those who cannot get an account elsewhere. The government is also aware of the issue and has made it national priority through the UK Financial Inclusion Commission.

Unprofitable customers

Unfortunately, while offering free accounts to the unbanked is a step in the right direction, it won’t solve the problem. We have to take it more seriously than that. There is a reason why the banks have excluded so many people: It’s because they are unprofitable customers. The established banking model relies on rich and middle class customers, preferably middle aged too. If you want a personal service you have to pay for it or you can go online and do it yourself – and pay a little less for it.  That doesn’t make much room for the little old lady with her landline or the unemployed with a bad credit rating. Even if the banks wanted to include everyone – and I actually believe most of them do – their business model prevents them from doing it.

London is the global capital of fintech and it is suggested that new financial technologies can support growing financial inclusion.  To some extent, I think it will or rather, I can see that it actually does in some ways. We see new fintech startups offer cheaper services to many of those whom the banks have rejected. But these new customers are tech savvy young people with smartphones who can navigate the financial system. At the same time, the fintech community develops highly sophisticated solutions, like payments via smartwatches and mobiles which may challenge the banks, but at the same time pull the financial system further away from the have-nots:  “You can now pay for your tube ride with your nfc-enabled visa card or via apple pay!” Not exactly the solution you are looking for when you have just taken out a payday loan to pay the electricity bill. Many new fintech solutions are implemented to cut costs for a company or a bank but not make it easier to the less fortunate.


So how do we go about solving the problem? I don’t think there is any alternative to the creation of a financial infrastructure, which includes everybody regardless of age and social background, and which everybody is able to operate regardless of financial and digital capacity.

Firstly, I believe that banks are responsible for developing and maintaining a national financial infrastructure. It’s not an option, it’s an obligation. This is why financial institutions get protection from the government; they have received a license to operate in Britain, which is the country of the financially excluded as much as the included. Banks as an industry cannot ignore 20 per cent of the population just because they are bad customers.

Secondly, I don’t expect the financial industry to service 10 million financially excluded people out of charity. I expect them to develop new business models that will enable them to do it with a profit. As it is now, the banks want the customers to change: “Get an iPhone, get online and become financially literate so we can help you”. But protecting an obsolete business model instead of developing a new one is a sign of laziness. Banks have a moral obligation to move out of their comfort zone and make new and innovative products and business solutions that enable them to support, and make money from, a growing community of people who are otherwise at a risk of becoming second-rate citizens.

When the banks have developed their new business models they are ready to grow again, because outside the UK there are two billion unbanked people waiting to become their new customers.

Nils Elmark is founder of the business and finance consultancies Incepcion and He is a futurist who helps companies create better and braver dreams. Nils has written three books on his old Remington typewriter and is a great motorcycle enthusiast.


Photo credit: Warren King Photography

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Nils Elmark is the founder of the business and finance consultancies Incepcion and He is a futurist who helps companies create better and braver dreams. Nils has written three books on his old Remington typewriter and is a great motorcycle enthusiast.