Accelerating toward greater financial inclusion

The survey of 300 senior executives in the financial services industry revealed that progress had been made in reaching underserved and unserved customers, but also opportunities for improvement.

Key messages

  • Financial inclusion-focused institutions (FSIs) prioritize leveraging innovative technologies and alternative data. Nearly half of the survey respondents stated that their organization plans to use technology and innovative business models to scale financial inclusion efforts in the next six to twelve months.
  • The success of financial inclusion is dependent on third-party alliances, community support, and other factors. Nearly 60% of respondents to the survey are working with local associations and community organizations to increase their financial and other commitments.
  • The respondents from FSIs who have yet to launch formal financial inclusion programs cited concerns about financial costs and technological constraints being the main obstacles to gaining traction.
  • Financial inclusion initiatives primarily focus on employee well-beingreaching underserved and unserved customer segments, and financial education endeavors.
  • Nearly half of the respondents to our survey said that their companies were engaged in trust-building activities to attract and develop underserved and unserved customer segments. Help customers achieve their financial goalsbe more sympathetic to the financial situation of customers, and offer financial literacy resources. Our survey showed that there may be a disconnect between the priorities of underserved customers and FSI’s approach to this critical segment. Financial firms might need to recalibrate their targeting and make a more significant distinction between the underserved and unserved customer segments.

Learn more

  • Read Part One: Driving Purpose and profitability through financial inclusion
  • This article was featured in Deloitte Insights Magazine
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Purpose Beyond Profits

FSIs now place diversity, equity, and inclusion (DEI) and drive positive social changes through purpose-driven initiatives at the forefront of their long-term strategy goals. However, bringing such strategies to market takes much work. FSIs must balance shareholders’ expectations for financial returns with those of society, customers, and employees for a better bottom line1.

Financial services: A future with a higher bottom line

The convergence of topics such as prosperity and growth, social cohesion and equity, conflict management, environmental sustainability, governance, and equity has led to a momentous change. Profits are significant, but so is the future of our planet. 2 HTML2 HTML2 HTML2­. It blurs the lines between those who strive and those who are successful until there is less inequality and greater wealth sharing. The higher bottom line is the human and financial profit that can be gained by a world more educated, fair, and sustainable. Financial services companies are uniquely positioned to tackle major social issues, create new markets and generate profits, not just in support of shareholders’ interests but also by working with other stakeholders and communities while actively rebuilding trust in the institutions. They can and should aim for what is known as “a higher bottom line.”

In a highly competitive job market, being able to exceed the expectations of both current and future employees on social issues is a key differentiator. Deloitte’s A Call for Accountability and Action study found that millennials and Gen Zs “want organizations to work together–governments, educational systems, and business–to drive change on a much broader scale.” 3 How and to what extent an organization devotes resources to promote financial inclusion–providing access to valuable and affordable financial products and services to meet the needs of the unserved/underserved market–can reveal its organizational priorities.4 We searched for signals of progress and achievements in reaching unserved and underserved customer segments. We found that FSIs were focusing on financial inclusion through various means, even though there is still much work to do before equity in financial services can be achieved. There may be a more inclusive financial service industry on the horizon.

The Drivers of Change: Tipping the Scale towards Continuous Progress

We surveyed 300 senior FSI executives in the United States, 53% of whom are CXOs, and 47% are senior leaders who were either responsible or connected to their firm’s initiatives for financial inclusion. (See survey methodology).

  • We classified respondents’ organizations based on their opinions about the maturity of financial inclusion efforts in their organizations. Aspirers Have yet to begin their financial inclusion initiatives or programs but are planning them.
  • Developers are in the early stages of launching or have already launched their strategies and are gaining momentum.
  • Forerunners: We have developed financial inclusion strategies and have seen progress.
  • Achievers: They have achieved their financial inclusion goals.


Financial inclusion is a priority for FSIs

At least three out of four respondents believe financial inclusion is a critical pillar of their corporate social responsibility strategy. Nearly the same number of respondents indicated that their company has a clearly defined vision and an action plan for advancing its financial inclusion agenda. Our survey shows that a majority have begun their journey towards inclusive finance. Ninety-six percent of respondents reported that their companies have some financial inclusion initiative, and 17 percent said they had achieved what they had set out to achieve (figure 2). Figure 2 shows that none of the respondents stated they did not have plans for financial inclusion.

Our survey results showed that leaders in the financial sector believe that doing well is just as important as doing good. Nine out of 10 respondents consider profitability when designing solutions for financial inclusion. Critical You can also find out more about You can also read about the importance of this in goal. All respondents from Aspirer FSIs placed a high priority on profitability—financial cost concerns. You can also learn more about technology constraints As their top challenges when prioritizing financial integration. A clear responsibility for efforts to promote financial inclusion can strengthen FSI’s response

What functional areas are responsible to an organization for its financial inclusion strategy? Our survey revealed that DEI, environmental, social, and governance functions were among the least selected. The most popular choices were corporate strategy, leadership of business lines, marketing and branding management, and innovations. Most respondents stated that several functional areas are responsible for advancing financial inclusion. Four was the average. This indicates one of two scenarios: no centralized ownership for financial inclusion strategies or shared ownership across functional areas. Nevertheless, a clearly defined strategy and a line of reporting could help FSIs progress, particularly those in the planning stage.

The financial well-being of employees is the main focus for most respondents.

In response to the question of which initiatives receive the most attention in the organization of the respondent, 70% chose employee well-being as their top priority, followed by reaching out to the underserved (55%), unserved segments (53%), and financial education endeavors (51%). The responses were consistent, despite the maturity levels (figure 3). The first two initiatives are more critical to achievers.

The FSIs do not focus exclusively on the financial well-being of employees. In a study from 2020, 62% of employers in all industries felt highly responsible for the financial well-being of their employees, an increase compared to 13% in 2013. 11 Financial wellness programs can include education about credit products for employees, discounts on financial product through partner organizations and investment services in order to plan long term financial goals. Most organizations can start by focusing on the financial health of their employees, a low-risk and high-return effort. Financial wellness programs can make it easier for employees to access financial services, even those who are underrepresented. These resources can boost employee productivity and engagement. To have a more significant impact and achieve a better bottom line FSIs need to look beyond their organization and prioritize engagement with the broader ecosystem and community.

About half of the respondents, particularly those from Developer and Forerunner Financial Inclusion Services, indicated they intend to use technology and innovation in business models to scale up their efforts to increase financial inclusion (see the following section). Six out of ten Achiever Financial Services Institutions (FSI) are already doing this.


The top strategic priorities of FSIs are trust-building services.

Most respondents reported that their companies were involved in building trust by offering resources such as helping customers to set financial goals and achieve them, showing more empathy for customers’ financial circumstances, and helping to educate customers about financial literacy. There were no significant differences in maturity levels. The needs of the underbanked and underserved appear to differ from the priorities the executives surveyed indicated.

A recent Deloitte consumer survey revealed that underbanked customers prefer different types of products, lifestyle-related rewards and offers, and competitive pricing or low fees. In a recent Deloitte survey, underbanked consumers preferred different products, lifestyle-related offers and rewards, competitive pricing, or low fees. However, senior executives from the banking and capital market sector ranked the latter two as their lowest priority to appeal to underbanked clients (figure 4). The results show that there may be a disconnect between the approaches of financial firms to serve the underbanked and their priorities. Some FSIs might need to change their strategies to better align with the preferences of these underbanked customers.

Industry leaders focus on a short-term goal: harnessing alternative data and developing fair AI/ML algorithms to achieve their financial inclusion goals; FSIs must look beyond traditional data sources. Artificial intelligence (AI), machine learning (ML), and other technologies, such as artificial intelligence (AI), enable FSIs to reach previously untapped markets at lower costs. This is a significant concern for Aspirer Financial Services Institutions. Fintechs and other institutions are evaluating or creating credit profiles of “thin files,” “stale files,” or “credit-invisible” customers. FSIs increasingly use data-driven algorithms for lending decisions or to complement existing credit profiles.

FSIs can train their models to use alternative, more equitably distributed data to eliminate bias. Payment history can be used to gain a different perspective on consumer behavior. Experian’s 2020 State of Alternative Credit Data report states, “89% of lenders believe that alternative credit information allows them to offer credit to more consumers.” 16 Federal regulators also acknowledge the benefits of alternative data for reaching consumers who cannot access credit via traditional means.

In recognition of this, more than half the respondents in the following sectors: banking, capital markets, investment management, commercial property, and insurance, plan to implement AI/ML models that eliminate bias and use alternative data within the next 12 months. When properly deployed, these technologies can provide opportunities to customers previously excluded from the formal financial system.

Underwriting life insurance using alternative data

COVID-19 has prompted insurers to use alternative data in underwriting. Until recently, life insurers relied primarily on traditional sources of information–customer application forms and medical examinations. Life insurance carriers used alternative data sources, such as biometrics and genomics, to supplement or replace traditional data. This method of using alternative data allows for faster, continuous underwriting and helps insurers to reach underserved markets. 19

To eliminate bias, you need more than just equal data. FSIs need to focus on understanding the local context and organizational diversity to reduce bias. They should actively engage in bias detection and explain the causes of biases. HSBC has, for example, developed a governance structure that includes ethical principles for AI. 18


Most FSIs still partner with local organizations to offer financial literacy programs.

FSIs that pursue financial inclusion strategies should show a commitment to communities where they recruit and invest. A visible and tangible presence of the brand can help firms build relationships with local communities and businesses and create trust.

Nearly 60% of respondents to the survey are working with local organizations and associations to increase their impact on financial inclusion. For example, FSIs have invested billions and 20 dollars into minority depository institutes (MDIs) and community development financial institutions (CDFIs). FSIs demonstrate a corporate mission beyond profit by supporting small businesses and individuals through lending, housing, and neighborhood revitalization. They also support employee volunteerism and provide financial education.

Financial literacy is a part of investing in communities. Financial literacy is a critical component of investing in communities. The National Financial Educators Council estimates that financial illiteracy will cost American families $415 billion by 2020. Fifty-seven percent of respondents have already established these programs. As mentioned above and shown in Figure 4, a Deloitte study shows that financial literacy programs are not a top priority for underbanked clients. The FSIs should therefore focus more on financial literacy programs for unbanked clients.

The following six to twelve months will likely focus on leveraging established distribution channels to serve the community better.

FSIs may invest in distribution channels to offer broader financial services where underserved people live and work. Forty-six percent of survey respondents, including half Forerunners members, plan to increase access to financial services and products using established, community-based distribution networks. For example, retail outlets and post offices are used for banking customers, while workplaces or car dealers are used for insurance customers.

These initiatives show that FSIs can do it with others. By interacting with the communities they serve, FSIs can bridge the gap and promote financial inclusion programs.


FSIs will be mulling over multiple initiatives related to ecosystems in the next year.

FSIs have many opportunities to establish partnerships with other players in the ecosystem. This will help them achieve their goals of financial inclusion. In all maturity levels of respondents, a large proportion said that their institutions would likely explore multiple initiatives for financial inclusion with fintech and other financial service providers.

Leveraging partnership to access new data sources: Collecting and analyzing alternative data is more complex. Various alliances and collaboration relationships are required to access new data (figure 6). Data providers’ relationships with FSIs can play a massive role in facilitating finance. Collaboration with fintech and third-party providers can help FSIs reduce costs, create alternative credit scoring solutions 23, and accelerate the implementation of strategic initiatives.

Partnerships between underrepresented businesses and wealth-creation

Small businesses owned by nonwhites are more vulnerable than those owned exclusively by whites. In a report on the impact of COVID-19, the Federal Reserve Bank of Cleveland noted that “Black owned businesses closed more than twice as often as white owned firms, and in some cases experienced declines in the cash balances which were nine times steeper” 24as white-owned companies. FSIs, however, can work with non-white-owned firms to help them thrive and positively impact wealth creation – an essential step towards narrowing the wealth divide. Mastercard’s Start Path Program, for example, invests in nonwhite fintechs that, in turn, support underrepresented segments. Mastercard’s Start Path program invests in nonwhite fintech, supporting underrepresented segments.

Public-private partnerships can drive regulatory compliance and create solutions.

FSIs should work with public institutions to leverage new technologies and fuel innovation in financial inclusion. These partnerships benefit both parties: FSIs encourage regulators to address regulatory fragmentation and overcome unanticipated obstacles as they occur. FSIs can also benefit public institutions with their expertise and innovative ideas.

In 2020, the Office of the Comptroller of the Currency launched Project REACh – the Roundtable for Economic Access and Change. Project REACh includes FSIs, national consumer advocacy groups, business leaders, and technology firms. The project aims to create policy and structural change at the local and national levels to provide underserved communities with greater access to credit and capital.

Engaging fintech for enhanced market access and innovative solutions

Through partnerships, fintechs can improve efficiency, reduce costs, enhance their offerings, and gain access to new markets. Fintechs gain access to capital and expertise. Unserved and underserved groups benefit from better financial services and the opportunity to fully participate in the financial system.

Fintech partnerships are more than just transactional efficiency. TD Bank Group, for instance, and Flybits are working together to provide personalized customer experiences.27 AXA has partnered with MicroEnsure to expand insurance coverage to new customers in developing markets.28 Discover Financial Services teamed up with Zest AI to develop an AI-based solution for credit scoring.29

Poised for higher bottom lines

FSIs can be essential in restoring trust and contributing to a sustainable future where profit and social impact coexist. More than 60% of respondents identified their companies as Forerunners and Achievers. FSIs are responding to the call for change by meeting the needs of underserved and unserved customers. Many American households still need access to the traditional financial system. Even Achievers who believe they have achieved their financial inclusion goals can still transition the underserved and unserved into a nascent client base.

Even those FSIs ahead of the curve should continue creating and building on long-term strategies that narrow the wealth divide. Financial firms must create an environment encouraging collective and inclusive participation in all financial services. The financial services industry can only achieve a higher bottom line when doing this.

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