England & Wales, Global, Scotland Technology, Welfare and equalities

Using data to support digital and financial inclusion

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Since the outbreak of Covid-19, both the scale and impact of digital exclusion have been felt more keenly than ever. Handy tech-based solutions such as virtual lessons, video calls to prevent loneliness, preferences for digital over cash transactions or bringing key services online (such as video appointments with doctors), have led to deepening inequalities between those with and without proper IT access.

As society becomes ever more digitised, those who don’t have the devices, internet access or digital skills necessary to keep up with the transition are left behind with serious consequences. Negative impacts of digital inclusion can be felt in all areas of life, from finding jobs or accessing work, to healthcare, education, costs of goods and services and connecting with friends and family and the wellbeing that provides.

While we might typically imagine that most of those who are unable to make use of technology would be older people, it is often people who are in poverty who end up most digitally excluded. Thanks to the rise in digital payments, online banking services, and online applications for financial services or employment, financial exclusion often accompanies digital exclusion, compounding vulnerability. As transactions are increasingly cashless and cash infrastructure is gradually removed – accelerated by the pandemic – people who remain reliant on cash or who have limited access to digital financial services may face restricted choice in where they can spend their money, or even be excluded from accessing some services altogether.

Understanding the scope and scale of the issue is the first step to better policy formation at a national and at a local level. This requires a better use of data to understand where financially fragile households are and why. It also requires a better understanding of how to reach and support people if they aren’t already ‘fully present’ online.

Mark Fowler, Strategic Director of Community Solutions at the London Borough of Barking and Dagenham (LBBD) said:

“At Barking and Dagenham we have invested a significant amount of effort, over a number of years, to embed  a more preventative service model that is grounded in proactive, partnership working across the organisation. A key focus of this work is the identification of vulnerable or potentially vulnerable groups earlier – enabling us to better target the way they are supported.  This has required a significant shift to proactive intervention; reduced dependency on the council; strengthened neighbourhood working; and improved communication between services, partnership organisations and community hubs.

Throughout this period, we have worked in partnership with Xantura, utilising their OneView platform to help to identify vulnerable groups of residents, manage proactive contact and measure the impact of our work.

Financial inclusion is a central pillar of our preventative approach. The pandemic has had, and continues to have a huge impact on households and in many cases can be a catalyst which accelerates wider issues. With that in mind, we are now using the OneView platform as part of a wider strategy to proactively support households that are financially vulnerable and have wider risks present, whilst simultaneously identifying households that do not have these vulnerabilities – so that collections activity can progress without risking wider deterioration in outcomes.

The initial results have been extremely promising, and we are already receiving some fantastic feedback from residents who have been proactively contacted and supported.”

Research from Bruegel has shown that 1 in 3 European households (including UK data), were unequipped to deal with a financial shock before the pandemic. Bruegel is a European economic think tank and has been conducting research on support to households amid the phasing out of Covid-19 support measures. Accessing financial services, can help households stay above water when shocks hit them, but many of the most vulnerable families are missing out on access to financial products and services, not least because of exclusion from digital channels.

It’s important to look at the country level impact of financial exclusion and to removal of supports (as we’ve done here in LGIU member-only UK briefings on ending the Universal Credit uplift and the economic consequences of Covid-19), but real families are feeling the impact. Better use of data and a preventative approach to support in both digital and financial exclusion can make a real difference to help households recover and remain resilient over the long haul.

LBBD’s Mark Fowler and LGIU’s Ingrid Koehler are looking forward to exploring this issue further at a techUK event: How can data and analytics help local authorities improve financial inclusion on 16 Nov at 10am GMT.  And see our latest Global Local Recap on digital and financial inclusion.

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