Millions of full-time employed have no bank account

A third (33 per cent) of Europeans in full-time employment do not have a bank account or payment methods at their disposal, leaving them financially cut off from society, according to new research carried out by Mastercard.

The data revealed that 35 per cent of the financially excluded are aged 18-34 and 87 per cent have lived in the same country their whole lives.

The findings also show that 38 per cent pay their rent in cash and, incredibly, 88 per cent of those surveyed pay for all of their other amenities in cash.

However, among this same section of society, the research uncovered a vastly increased proliferation of technology.

Access to technology via smartphone usage has significantly increased, from 29 per cent in 2013 to 49 per cent in 2016.

Yet, a quarter (27 per cent) still find they are unable to access financial products and services, highlighting a definitive disconnect between those using technology and those accessing financial products and services.

A constant need to rely on cash leaves these people extremely vulnerable to loss or theft of money, payment disputes – as there is no electronic trail or proof or purchase, and a complete inability to prepay or schedule payments ahead of time. This section of society may then seek unsuitable, alternative payment methods, due to cash-flow issues, which can lead to debt.

Ann Cairns, President International for Mastercard, said: “For many people the concept of exclusion is often seen as a developing markets problem but today’s report shows clearly that this is as much of a problem in the perceived developed markets of Europe as it is around the world. Exclusion has a serious impact on a person’s quality of life, denying them basic benefits and choice including increased protection, convenience and access to the global economy. That the tools and technology are readily available to those who are in need of inclusion demonstrates that this is a solvable problem and one that partnership, education and innovation can easily solve.”

The research suggests the main reasons behind the absence of a full bank account or banking services are a lack of knowledge, and mistrust of the banking sector. A fifth (20 per cent) do not want a bank account at all and a further 10% say they do not trust banks with their money. Together with innovation and education, digital prepaid solutions and electronic payments can help to bridge the gap between technology and financial services.

Ms Cairns added: “While the findings on financial inclusion are troubling, given the sharp increase in access to technology like smart phones, it is clear that the road to financial inclusion is a digital one. By tapping into the rapid rise in technology, we can develop new solutions to ensure everyone in Europe has access to the financial system. This will directly improve millions of lives and benefit us all by encouraging a fairer, more equal society.”

For the link to the full report, please click here.