Podcast ¦ Debt Talk: Debt Talk The Cost of Digital Inclusion

Key Takeaways

• Digital inclusion extends beyond internet access to encompass digital skills, device appropriateness, trust, and confidence.
• Approximately 11 million people in the UK lack basic digital skills, highlighting a significant digital divide.
• Digital exclusion is most prevalent among low-income families, older adults, recent school leavers, women, and marginalised communities.
• Currently, around six in seven people are digitally connected, leaving one in seven offline due to lack of access, skills, or connectivity.
• Financial exclusion closely correlates with digital exclusion; those without devices, skills, or connectivity face compounded barriers.
• Digital ID systems pose risks such as financial barriers for those unemployed or low-income, due to the requirement of devices and internet.
• Concerns surround privacy, with fears about personal data misuse and the shift of default sharing requirements impacting trust.
• Digital exclusion is intrinsically linked to financial exclusion, limiting access to banking and financial services.
• Legacy decision-making processes and risk assessment models in financial services can unintentionally reinforce digital and financial exclusion.
• AI and algorithms in financial services risk perpetuating bias if trained on unrepresentative data or developed without diversity considerations.
• Real-time, risk-based decision-making with transparent and explainable AI can enhance inclusion and reduce fraud, if properly regulated.
• Effective collaboration between policymakers, financial institutions, and technology providers is critical to tackling financial and digital exclusion.

Key Statistics

• 6 in 7 people are digitally connected; 1 in 7 is not.
• 11 million people in the UK lack basic digital skills.
• Half of low income families are digitally excluded.
• Unemployed individuals are 2-3 times more likely to be digitally excluded.
• Up to 22% more likely for women to be digitally excluded.
• More than 225,000 people in the UK served as money mules last year, a 20% increase.
• 23% of money mules are under 21; 65% are under 30 in the UK.
• Globally, economies could save £3.3 trillion annually through improved risk-based decisioning to combat financial crime.
• UK financial institutions could save £2.5 billion annually by implementing better AI for AML.
• Over 225,000 people identified as money mules in the UK last year.
• In the UK, more than a quarter of money mules are under 21, with 65% under 30.
• Recent regulatory developments in the UK focus on AI controls, like the FCA sandbox, to improve anti-money laundering efforts.

Key Discussion Points

• The omnipresence of digital in everyday life, from education to healthcare.
• Practical questions around what being “digitally connected” truly entails beyond mere device ownership.
• The depth of digital exclusion, covering device appropriateness, skills, confidence, and accessibility.
• The inherent risk that digital ID systems could create financial and social barriers for vulnerable groups.
• Concerns about privacy, data protection, and the potential shift of default sharing from privacy-protective settings.
• The interconnected nature of digital exclusion and financial exclusion, with low-income families being most impacted.
• The impact of digital exclusion on financial services, especially legacy processes and risk assessments.
• How biased or unrepresentative data used in AI can perpetuate exclusion if not carefully regulated.
• The importance of transparent, explainable, and human-in-the-loop AI systems in financial crime prevention.
• The necessity of regulatory collaboration and testing, such as FCA’s sandbox, to ensure AI supports inclusion without enabling exclusion.
• Challenges and opportunities for financial institutions to embrace inclusive, risk-based approaches.
• The importance of systemic collaboration and long-term strategies to combat digital and financial exclusion.

Podcast Description

This episode of the podcast explores the critical intersection of digital and financial exclusion within the UK, focusing on how technological advancements and policy initiatives, including digital ID systems, influence vulnerable and marginalised communities. Featuring insights from leaders in digital poverty and financial technology, the discussion covers key challenges like privacy, AI bias, and regulatory frameworks, alongside practical strategies for financial institutions and policymakers to promote equitable access to digital and financial services. The episode aims to inform senior managers and industry stakeholders about the social impact and operational considerations connected to digital innovation and inclusion.