By Alessandro Hatami
Banks that ignore financial inclusion miss more than a moral mission—they leave billions on the table. In this piece, Alessandro Hatami invites you to see underserved markets not as liabilities but as engines of growth. Forward-thinking leaders recognize that inclusion is not charity. It is smart, scalable business.
The financial services industry has never shouted louder about innovation. AI, embedded finance, and digital identity dominate conferences and boardroom agendas. Yet, behind the noise, one of the sector’s biggest engines of growth remains largely overlooked: financial inclusion.
For too long, financial inclusion has been treated as an act of charity or corporate responsibility. This view misses the real story. Expanding access to financial services is one of today’s most powerful – and profitable – strategies. Banks that continue to dismiss underserved communities are walking away from billions in potential revenue and long-term growth.
Financial inclusion means ensuring that individuals and businesses everywhere can access affordable, appropriate, and empowering financial services: payments, savings, credit, insurance, and advice. Despite decades of technological advancement, 1.4 billion people, globally, remain unbanked. As financial services increasingly move operations online, those lacking digital skills, official ID, or steady income risk being pushed even further to the margins.
The human cost of exclusion is significant. People without access to financial services often pay higher fees, rely on high-risk credit, and struggle to build assets or manage emergencies. In the UK, low-income households pay an estimated £490 extra per year simply because of the “poverty premium”. And the damage doesn’t stop with individuals – it reverberates across entire economies. Financial exclusion stifles entrepreneurship, dampens consumption, and limits economic resilience.
For banks, the cost of inaction is increasingly evident. Around 2% of the UK population remains unbanked, representing nearly £1bn in missed potential profits, annually. In an industry that generated £44.3bn in pre-tax profits last year, that’s not a rounding error – it’s a serious lost opportunity.
How fintechs are outpacing banks by serving the unbanked
While traditional banks hesitated, fintech innovators proved that designing for excluded communities creates strong, scalable businesses. Nubank began by offering no-fee app managed credit cards to those ignored by legacy banks in Brazil. Today, it serves more than 100 million customers across Latin America and is valued at over $49bn. Mobile money service M-Pesa turned phones into financial lifelines, lifting Kenya’s financial inclusion rate from 26% to 84%: And PayTM, which started as a mobile recharge platform, evolved into a super-app offering digital wallets, credit, insurance, and investment tools – reaching hundreds of millions, especially in rural and semi-urban India.
These successes happened because fintechs designed products with accessibility, mobile-first usage, and alternative data models in mind. They saw opportunity where others saw risk – and they built businesses that now dominate their markets.
Why legacy systems and thinking are holding banks back
Traditional banks continue to insist that low-income customers are unprofitable. Fintechs meanwhile are using alternative data, mobile-first design, and automation to reach underserved populations – cheaply, and at scale.
Despite mounting evidence, many banks still operate with outdated assumptions and rigid infrastructures. Standard onboarding requirements – formal IDs, proof of address, in-branch verification – create insurmountable hurdles for millions. Traditional credit-scoring models penalise freelancers, migrants, and those without long-established financial footprints. Even some fintechs, initially promising disruption, end up focusing on affluent, digitally savvy users, rather than those most in need of service.
Technology is not the barrier. Mindset is. To change the dynamic, financial institutions must rethink product design, onboarding, risk models, and partnerships. They must question whether their services are accessible to someone without a passport, or useful to someone whose income fluctuates weekly.
Bias, too, must be tackled head-on. Algorithms trained on exclusionary historical data risk replicating those patterns, denying fair access to those who need it most. Without active oversight and re-engineering, even AI-driven innovations can deepen divides rather than bridge them.
Why inclusive finance is the next competitive edge
As the industry evolves, innovation and inclusion are being recognised not as trade-offs, but as twin drivers of sustainable growth. Regulators are laying the foundations for a more inclusive financial ecosystem. Initiatives like open banking, streamlined Know Your Customer (KYC) regulations, and digital ID platforms are making it easier for new players – and progressive incumbents – to reach excluded populations. For forward-looking banks and fintechs, inclusion represents one of the few genuine remaining growth frontiers. Inclusion unlocks underserved markets, builds loyalty among first-time customers, strengthens brand resilience, and positions companies ahead of regulatory shifts. In a world where acquisition costs are soaring, and traditional markets are saturated, betting on inclusion is not just good policy – it’s smart business.
The next great advances in financial services won’t come from offering slightly faster payments to the already affluent. They will come from making first-time banking, affordable credit, and secure savings available to the billions who have been left behind.
Alessandro Hatami
