Money in a digital world: a reflection ahead of Budget 2024

The links between financial and digital inclusion

In the run up to the Budget, take a step back and think about money in a digital world…

How much cash do you carry? When did you last go to a bank, or get a paper payslip? Do you look online for deals, or money saving tips? Have you used DWP or HMRC online, looked up your credit score, downloaded a loyalty app? 

Money in a digital world - how we make it, manage it, spend it, save it, share it - is a potent example of the digital divide. Research points to links between financial and digital capabilities, and the online poverty premium (see UK Consumer Digital Index, Centre for Social Justice, CHASM, Fair by Design). 

Digital exclusion can tip people into poverty, and make it harder to exit poverty, while becoming digitally included can help people maximise their income, and claim financial support they’re entitled to, as well as improving employability and earnings (see QuidsIn Get Online Week special).

Will Government join up their financial and digital inclusion strategies?

Progressive, effective policy includes - but is much more than - access to cash. 

Two long-awaited Government strategies are on the horizon:

• The Economic Secretary to HMT, Tulip Siddiq MP, has made clear her commitment to improving financial inclusion across the UK.
• DSIT Minister, Sir Chris Bryant MP, recognises the need for a new Digital Inclusion Strategy.

The question is: will we see Mission-led, cross-government working reflected in joining up across these agendas in the coming months?

How community orgs and providers are combining financial and digital inclusion support

Earlier this month, I facilitated two online sessions with organisations providing a combination of digital inclusion and financial support in their communities, joined by members of HMT Financial Inclusion team and DSIT Digital Inclusion team - wanting to engage, listen, and learn to community-based providers. 

Twenty three people from 21 organisations took part from across England, Scotland, Wales, and Northern Ireland - all members of the National Digital Inclusion Network. They varied in size, scale, and set up - including social enterprises, small charities, and local branches of national charities like Citizens Advice. They varied in how they provide support (often crisis support, although most felt that one-to-one support over time is most effective). They varied in the communities and clients they serve, and in whether they provide FCA regulated debt advice (around a quarter were FCA regulated). 

The support they offered included: debt advice, financial health checks, finding out what support people are entitled to, helping people learn how to claim and manage benefits online, use online banking, online shopping, school payment systems, money comparison sites, avoid online scams and fraud, and build skills.

Across this diversity, common themes emerged about: 

• The negative impact of digital exclusion on people’s financial lives, especially for people with limited incomes and financial resilience
• Increased challenges around trust, motivation, confidence, and capabilities when it comes to using online services related to money - reflecting fear of scams and fraud, and the higher personal risks of making a mistake
• Risks of missing out on opportunities to improve financial circumstances or claim financial support due to digital exclusion barriers  and wider barriers (including literacy, numeracy, English language barriers)
• How lack of digital skills, confidence, and access can result in unsafe financial behaviours such as sharing passwords for financial services, or even sharing bank accounts beyond immediate family members
• A growing sense in some groups of feeling forced online, and resisting this
• Damaging impacts on trust, confidence, and motivation when experience of using online services is poor, or ends up costing more (e.g. hard to exit subscriptions; being hit by fines for not supplying information on time).

There was a clear message that digital and financial support go ‘hand in hand’. Also that many people who face digital and/or financial barriers often face other barriers, so support takes time; and that considerable staff time can be taken up by guiding people through online forms, but without the time to support people to learn how to do this themselves. 

What would help reduce financial and digital exclusion?

Community organisations shared lots of ideas about how digital exclusion risks to financial inclusion and resilience could be reduced.

1. Recognition (by Government, regulators, corporates) that digitising services without adequate support or alternatives pushes responsibility onto others (family, friends, community organisations, etc) which can lead to unsafe behaviours (e.g. sharing passwords)
2. Recognising digital exclusion as a form of customer vulnerability, and agreeing clear requirements for reasonable adjustments and support
3. Partnering with organisations working with people facing digital exclusion or with low trust/confidence to improve design, delivery, and support
4. Resourcing VCSE and others who support those facing financial and digital exclusion, ideally enabling them to support people over a longer period, and create safe spaces for people to seek support and stay safe online
5. Starting young - so children build financial and digital life skills at school
6. Improving design - standardisation, simplicity, usability of interfaces, apps, identify verification, etc - co-designing to make it easier for a wider range of people to self-serve, and making it easier for others to support them

Harnessing the FCA Consumer Duty to cater for customers impacted by digital barriers, including with essentials like getting a basic bank account.

No doubt that digital and financial support go hand in hand

For millions of people struggling with their finances, and feeling left behind by technology, there is no doubt that digital and financial support go hand in hand. 

We need the Government, the regulator, financial services, and the public sector to work together, and with us - as civil society, consumers, and communities - to find a better way of supporting people with money in a digital world. 

Getting this right is one of the pieces that need to be in place to deliver the Government’s Missions - breaking down barriers to opportunity and growth. In Episode 8 of Digital Futures for Good, our CEO Helen MIlner will pick this up with the Rt Hon Alan Milburn, discussing the Pathways to Work Commission report.

Acknowledgement

Thank you to the members of the National Digital Inclusion Network who shared their expertise and experience on digital inclusion and financial inclusion: Advancement of Community Empowerment, Advice NI, Age UK Calderdale and Kirklees, Bmoneywize, Bradford Trident, ClearCommunityWeb, Citizens Advice Doncaster, CleanSlate, Impetro CIC, Kensington Community Learning Service, Kensington and Chelsea Social Council, North and West Gloucester Citizens Advice, North Manchester Communities Partnership, Royal Borough Kensington & Chelsea Financial Inclusion, Simon Community Scotland, Skills Enterprise, Smartlyte, Starting Point, Swansea MAD, The Bread and Butter Thing, and Youth Ngage Kent. Thank you also to Megan Potts for research support.