Digital Financial Inclusion

Financial inclusion is a hot topic as the move to online and mobile banking leads to fewer bank branches. When banks announce closure plans they quote how many customers now interact over the phone, internet or smartphone and the number of people registering new mobile phone apps (in the case of HSBC, 90% and 750,000 respectively in the last 12 months).

Although people glibly talk about digital payment and banking broadening financial inclusion, the reality is that many people find it challenging, if not daunting, to go digital. HSBC, which has announced branch closures in the UK, has launched an education programme called HSBC@Home to help address this.

HSBC has 350 specialists across its UK branches trained to help people to go digital. HSBC contacts customers and invites them to join live virtual webinars that cover topics ranging from digital tools and services to fraud and financial fitness. HSBC has held over 200 sessions so far.

HSBC is not alone in such initiatives. It is ironic that to gain confidence and digital skills you have to have the technology, understanding and confidence to join a webinar.

The risks of closing bank branches

Research carried out by CivicScience suggests that people are starting to do less of their banking online. Based on regular US surveys of over 336,000 people between 1 January 2020 and 12 April 2021, 44% now do less than half of their retail banking online compared with 39% for four months during the period.

The survey asked what drew people to a bank when they wanted to open a new account. Despite all the online and mobile banking offerings banks develop to bring in potential customers, what mattered most was how close a physical bank branch location is to their home (26%). The geographic location was the primary driver irrespective of age or income. The attractiveness of the digital offering was only valued by 6%.