What's going on? Racial equality and financial access
So, football is not coming home, which is disappointing in itself, but it was even more upsetting to witness the racial abuse that the young Black players received after England lost in the final. It showed that, even when a nation can seem united, it only takes 120 minutes and penalties to show that racism remains rife in society, even after so much has been written and commented on the murder of George Floyd in the US.
The beautiful game is not so beautiful when these headlines hit, and it is a reminder of the social inequality that remains in our society. Which takes me onto a topic that has been focused on in the last year with the Ipsos FRS team: social inequality in relation to access to financial products. What should the industry be thinking about and what more should we be doing?
What’s the problem?
The gap in access to affordable credit for some minority ethnic consumers is a key concern. FRS data shows lower levels of access to unsecured loans and credit cards is pushing Black consumers into more expensive forms of short-term borrowing. We see higher levels of overdraft usage and payday loan usage at almost every social grade compared to white British consumers, when controlling for age.
This pattern also extends to Eastern Europeans living in Britain – a minority group we highlight in our report. Even though overdraft usage is more frequent among minority ethnic consumers, so is exceeding the agreed limit – suggesting overdraft limits tend to fall short of needs and, as a result, minority ethnic consumers will be more subject to overdraft fees than white British consumers.
Marketing
Providers can make a difference by ensuring their marketing materials and advertising reflect the diversity of the country’s population. Seeing ‘people like me’ represented in a provider’s imagery and adverts can go a long way – as long as good intentions aren’t undone by insensitive depictions that play to racial (or other diversity-related) stereotypes.
If you are doing things right – let your customers know. For example, Metro Bank publishes diversity statistics on its website alongside its stated policy of recruiting branch staff from the local area to reflect the make-up of its catchment area. Another step is to ensure continuous, high-quality staff training and where needed, behavioural changes, to ensure staff are aware of unconscious bias that could disadvantage minority customers.
Products and services that address specific cultural needs – such as Sharia banking, money transfer services and international and foreign currency banking – can attract a more diverse customer base, as seen with big banks HSBC UK and Barclays; but also, foreign banks operating in the UK such as Al Rayan and Bank of India. Where access to credit is an issue, consider a save-to-borrow product, or review your overdraft policy. This may not be easy, but the problem of inclusion demands the hard work be done if we are to make a difference.
Why now?
From the ashes of tragedy arises hope of renewal and positive change. With young adults increasingly anxious to ensure their voice is heard by policymakers and lawmakers, and 75% (c. 3.8m) of minority ethnic adults in Britain supporting the Black Lives Matter movement, there is a renewed opportunity for individuals, policymakers and the business sector to make real and lasting advances in raising equality.
With 5.1 million adults in the UK from minority ethnic backgrounds and non-EU net migration to the UK gradually increasing since 2013, minority ethnic people as a consumer segment is growing – and will grow older. With that, their demand for more complex financial products will increase, which can only be a good thing for providers. Whether this is also a good thing for all minority ethnic consumers is up to the sector. What is clear however, is that more work needs to be done.
