The report, ‘Levelling the playing field’, makes recommendations to build inclusive access to financial services for individuals from minority ethnic groups. It finds people from minority ethnic groups experience higher levels of discrimination and face multiple barriers to accessing mainstream finance, including a lack of trust, a ‘one size fits all’ approach and a lack of transparency around decision-making.
The report draws on research from Ipsos and ClearView Research, and was commissioned by Fair4All Finance in partnership with the Esmée Fairbairn Foundation and StepChange Debt Charity.
It calls for commitment across the UK banking sector to work individually and in partnership to meet the needs of all communities, with an important role for regulation too. Recommendations include listening more closely to the experiences of minority ethnic groups, increasing representation of these groups in workforces and collaborating to eliminate bias in decision-making.
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Q: What are the key challenges being faced in levelling the playing field?
A: One of the overarching challenges has been a lack of evidence around this issue — since The Runnymede Trust’s landmark ‘Financial Inclusion and Ethnicity’ report in 2008, there has been little research on the experiences of exclusion by ethnicity in the UK, the reasons behind these issues, or how to address this exclusion. This research aims to remove that first barrier to change, enabling the newly created practitioner group to work collaboratively to turn recommendations into actionable solutions.
The report highlights that people from minority ethnic groups are facing greater exclusion from the financial system right now and challenges in the entrenched design and behaviours of the system are contributing to this exclusion. One in five people from minority ethnic groups have experienced discrimination due to their race when dealing with financial service providers and we find evidence of multiple barriers to accessing and using mainstream finance.
People from minority ethnic groups are less likely to use certain channels for fear of discrimination; one in 10 don’t use telephone or video channels; and one in 20 don’t visit branches. Other barriers include a lack of transparency around decision-making by financial institutions, a lack of trust and a ‘one size fits all’ approach.
Banks need to look more at what data they hold or don’t hold and how they use it, how they improve cultural representation across all levels of a business to support better design of products and services, and how they engage with people and community organisations to break down barriers and build trust and support people’s financial resilience.
Q: What are the key benefits of having so many major banks supporting the goals of Fair4All Finance?
A: The sector is strongest when it works together and realises the mutual benefits — commercially, reputationally and ethically — of this sort of collaboration. Mainstream banks also have large customer bases including people from minority ethnic groups, so collectively can create substantial change.
Applying an ‘ethnicity lens’ to the Consumer Duty regulation is crucial to delivering good outcomes for customers, and we know that designing for the most excluded will benefit everyone.
Q: What examples of positive work can you highlight that have helped address the imbalance, and are there any particular areas in which you’d like to see an improvement?
A: One example we looked at was Metro Bank, and their approach to diversity and inclusion as a ‘continual way of life’, and how there is a focus on cultural representation. They embed diversity and inclusion at all levels, including branch level.
Important lessons can be learned from the alternatives people from minority ethnic groups have sought out, an example being fintech solutions and community-based schemes. We spotlight some case studies that are using technology to bring innovation in personalisation through open banking, community engagement and product types that better meet people’s needs.
Q: What are the chief changes you’d like to see made to the existing financial services system to embrace those that are currently excluded?
A: Working with the practitioner group, we have put together calls to action in seven areas: inclusive design of products and services; transparent decision-making; breaking down barriers to access; improving cultural representation within institutions; engaging with communities; strengthening financial resilience of minority ethnic groups; and more appropriate regulation.
These contain a range of actions which have the potential to make a difference on several fronts. For meaningful change to happen, we need to understand and act on the underlying issues.
Q: Are there any processes or technologies you’d suggest banks could adopt to get something of a head start?
A: Our calls to action contain various recommendations, some of which might be quicker to implement than others. This will vary from provider to provider. Crucially, they all need to be backed up by real organisational commitment.
The report talks about the importance of getting an inclusive design process right and engaging lived experience and harder to reach voices into product design, testing and distribution and removing unconscious bias.
Q: Have you faced any resistance when it comes to your calls to action?
A: The calls to action are far reaching and some will take longer to implement than others. We have been incredibly encouraged by the reception across the industry, whether that be banks and building societies, fintechs, credit reference agencies, community organisations, or regulators.
There will be a role for many involved and we encourage organisations to think about how they can take the calls to actions forward individually and collaboratively with the sector for the long term.
Q: What reasons underlie the findings such as that buy now, pay later (BNPL) users are more likely to come from an ethnic minority background?
A: The higher levels of BNPL usage illustrates that more mainstream products may be less accessible to people from minority ethnic groups.
Experiences of discrimination led people to disengage from their banks and prevented them from using additional services or products. People favour areas such as an easy sign-up process (47%), making banking easier (44%), feeling more in control of your money (36%), and remote sign-up (45%), as we saw when it came to looking at the pull factors of fintechs.
Q: Technology is actively available to other minority groups when it comes to digital accessibility. Are there any examples of technologies that could be deployed to help bridge the ethnic exclusion gap?
A: A recent report points to the fact that people from different ethnic backgrounds are facing bias in access to products, pricing of products, and services received based on how their personal data is used as part of algorithms and AI.
Data that is used to assess risk, such as postcodes, can be correlated with personal characteristics that can introduce bias in how firms use personal data and algorithms to assess risk and make decisions.
