BANKING SECTOR INITIATIVES TO PROMOTE FINANCIAL INCLUSION IN THE UK

An Investigation into the banking sector initiatives to promote Financial Inclusion in the UK

Acknowledgement

I would take this opportunity to thank my research supervisor, family and friends for their support and guidance without which this research would not have been possible.

Abstract

Financial Inclusion can be defined as the access for individuals to appropriate financial products and services. Financial inclusion is about ensuring everyone has the opportunity to access the financial services products needed to participate fully in modern-day society and the economy. Extensive research has shown that those living on low incomes, and experiencing multiple forms of disadvantage, are most likely to be affected by financial exclusion. Living without financial products is a significant disadvantage in an age where cash is slowly being replaced by debit cards and automated transactions, and living on credit is the norm.

This paper offers an analysis of the changing role of co-operative credit unions in tackling poverty and promoting financial inclusion in Britain. It examines the reality of poverty in low income communities and endeavours to critique the actions, methodologies and initiatives currently being adopted by credit unions to achieve financial inclusion. It examines the role of the UK government in its support for credit unions and offers an early analysis of HM Treasury's Financial Inclusion Fund. The paper argues that credit unions are best placed within the financial services industry to make an impact within financially excluded communities.

In recent years, the importance of financial services has risen significantly due to growing economy and innovative financial services sector in the United Kingdom. Exclusion from the financial systems brings real and rising costs, often borne by those who can least afford them. Promoting financial inclusion has therefore been, and continues to be, a key priority for the Government.

The research is about understanding the role of banks in initiatives to tackle financial exclusion. It is focus on the financial inclusion strategies which has helped hundreds of thousands of people with access to a bank account, affordable credit and free money advice.

The research study is also analyze the role of banking sector which has been a crucial partner in the progress to promote financial inclusion and the independent Financial Inclusion Taskforce which has helped develop the Government's approach to monitor progress and advice on initiatives. The research is also about identifying any issues or challenges faced to tackle financial exclusion.

Table of contents

Acknowledgement2

Abstract3

Chapter 1: Introduction7

1. Outline7

2. Rationale7

3. Background of the study7

4. Introduction8

4.1 Government Initiatives towards Financial Inclusion:9

4.2 From tackling poverty to achieving financial inclusion11

5. Aims and Objectives14

6. Importance of the Research15

7. Statement of Problem15

8. Research Questions15

10. Limitations17

Chapter 2: Literature Review19

3. Consequences of Financial Exclusion:21

4. Challenges for Financial Inclusion:21

5. Money and debt advice and financial capability22

5.1 Banking23

5.2 Credit26

5.3 Saving28

5.4 Insurance29

6. An inclusive transition29

6.1 Practising inclusion30

7. The credit union path to financial inclusion32

8. Basic banking and transaction accounts33

8.1 Savings accumulation37

9. Credit unions - a future in serving low income communities?39

9.1 Steps towards financial inclusion42

Chapter 3: Research ...