Read: Financial inclusion is crucial for maintaining vibrant communities

Inclusivity is key to a fairer, more equal society where everyone, whatever their background, can access opportunity and have the chance of a better life. That extends to financial inclusion too.

That means that people and businesses have access to useful and affordable financial products and services that meet their needs and are available to everyone, including getting the right advice to manage their money effectively. It’s especially important for less privileged communities and the most vulnerable who otherwise would not have access to essential financial tools that enable them to make and accept payments, get loans or insurance and save for the future. It means they can achieve short-term goals like buying a suit for a new  job, or longer-term goals like buying a car or a house. Financial inclusion can make a huge difference to how well people get on in life.  

Being unable to access mainstream financial services leads to financial exclusion and it’s now clearer than ever that can result in social exclusion, poverty and inequality. At a time when Lloyds Banking Group announced the closure of 18 Halifax branches and 22 Lloyd sites and Barclays the axing of another 15 branches across the country, that prospect will become much more of a reality for many people who live in areas they serve. The closures follow confirmation by NatWest last October that it would be closing 43 more branches during the first half of this year and by HSBC in November that it would be shutting a further 114 outlets between April and August. Consumer group Which estimates that UK banks and building societies have been closing branches at the rate of 54 a month since 2015 – that’s a total of 5,355 branches.

The number of people using services in-person has undoubtedly dropped over the last few years, with many preferring to use online banking and mobile phone apps rather than traditional counter services. Lloyds points to a 60% drop in footfall over the last five years at the sites it has just announced are closing. But the closures will leave some towns and suburbs without any bank at all, leaving the elderly and the vulnerable particularly at risk of financial exclusion. These are often the people who are also digitally excluded, unable to afford or use the technology that would allow them to do their banking online. Yet recent research has shown that the cost of living crisis has seen more people rely on their local bank to help them manage their money, preferring to get their advice and support from a real person. The fear of fraud, especially among older customers, is also a very real deterrent. Against a backdrop of cost of living pressures, there’s also been a rise in the number of people who are returning to cash as a way of managing their constrained budgets, withdrawing and paying in at free ATMs.

Apart from the importance of human interaction for those who may experience little during the normal course of their day, people who are struggling to cope financially will be unable to access the help that may make all the difference to their life chances and, as a result, will be more likely to experience isolation and poor mental and physical health. If they are trapped in debt or unable to access capital, if they can’t afford essential everyday items, it will significantly limit their access to opportunity. 

That’s why if we’re serious about true equality of opportunity, financial inclusion needs to be at the heart of efforts to level up every part of the country. The Purpose Coalition has included it as one of the essential elements of its 14 Purpose Goals, a unique framework that identifies key life stages and areas where barriers to opportunity exist. They’re an effective way for organisations to assess the impact they are having on improving social mobility, sharing their best practice and measuring progress. 

Goal 7 is Widening access to savings and credit, acknowledging that investing in yourself and being able to take the chances that will improve your life are vital to delivering opportunity.  The CEO of specialist lending and savings bank, Aldermore, Steven Cooper, is Commissioner for the Goal and is committed to ensuring financial resilience, support for buyers in the housing market and better financial education, all of which are significantly undermined if people don’t have access to the support that local banks can provide. Virgin Money, another Purpose Business Coalition member, is focused on a purpose-led approach to financial inclusion which includes a commitment that no Virgin Money customer will pay a poverty premium by 2030. It has introduced a basic M account which helps people, especially those experiencing financial difficulty, manage their finances better.

There is a further repercussion of local bank closures which will also have a negative impact on opportunity. Many high streets were already struggling before the pandemic. Repeated lockdowns resulted in more business closures and the loss not only of local shops and facilities but also of community spirit, with residents unwilling or unable to visit town centres which appear increasingly empty and unattractive. As branches close and businesses are no longer able to conduct transactions in person, the lack of a personal business relationship and the inconvenience of having to travel further afield may mean some will move elsewhere, weakening town centres yet further and deterring any potential investment.

Those without financial security and support, and those who cannot access savings and credit, get left behind. If the country is to recover from the pandemic, and weather the cost of living crisis, its future prosperity will depend on everyone at every stage of their lives being able to make the most of their potential. That means financial inclusion needs to be at the heart not just of government policy but of every organisation’s ambitions to deliver positive and life-changing social impact.